BackMarket roundup | Demonetisation favours smaller banks
CASA deposits of banks with a large branch network in non-metro regions has witnessed a bigger increase. In other news, truck and bus radial tyres gain ground
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The withdrawal of high-value banknotes has fulfilled banks’ dream of low-cost current and savings account (CASA) deposits. The combined CASA ratio of 18 banks out of the 39 listed that reported quarterly results has surged 3.78 percentage points in just one quarter, according to global investment banking firm Jefferies.
What’s more, CASA of banks with a large branch network in non-metro regions has witnessed a bigger increase in deposits than those with a largely metropolitan branch network. Therefore, regardless of the size of branch network, the location of branches has aided CASA growth. Thus smaller banks have won the CASA fight during demonetisation but what is not known is how much of the deposits they are able to retain.
Truck and bus radials gain mileage
Radial tyres are becoming popular in the trucks and buses segment after their success in cars. From about 22% in fiscal year 2013, the share of truck bus radial (TBR) tyres used in medium and heavy commercial vehicles is expected to increase to about 45% by end-FY17.
Cheap Chinese imports initially paved the way for greater radialization in commercial vehicles. As demand for TBRs expanded, domestic firms too added to capacity. At present, TBRs comprise 75% of the original equipment market and about 35% of the replacement market.
According to Antique Stock Broking Ltd, the replacement market demand is steadily shifting from bias to radial tyres. Although radials are considered superior, their offtake could improve if India’s road conditions become better. The other challenge is significantly lower pricing by Chinese competitors.
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