Financial fundamentals are getting stronger for India

HDFC Bank has become the fourth most valuable bank in the world in terms of market capitalisation after the merger with mortgage lender HDFC and also emerged as the second biggest company in India According to Bloomberg data, the merged entity will have a market capitalisation of $172 billion, the most after JPMorgan Chase, Industrial and Commercial Bank of China and Bank of America The merged entity will be India's second most valued company after Reliance Industries IFC, a member of the World Bank group, has extended a $400 million loan to HDFC to boost green housing in the affordable segment IFC's funding helped HDFC to focus on its green affordable housing portfolio, with 75 per cent of $300 million of the proceeds earmarked for this sector

Meanwhile, one of Asia’s biggest trades took place on Monday, but without real money changing hands Equity derivative contracts worth about $7 5 billion in open interest, a measure of investment exposure, shifted from Singapore to India It is a milestone in India’s campaign to compete with Singapore and Dubai as a key hub for Asian finance The SGX Nifty, a popular futures series on India’s key equity index, has been renamed Gift Nifty The new name promotes Gift City, the financial hub the government hopes to develop in Gujarat, h o m e s t a t e o f P M N a r e n d r a M o d i T h e M u m b a i - b a s e d National Stock Exchange has set up a derivatives offshoot there Fears that the move would cut liquidity eased as the Nifty 50 and Sensex, India’s key indices, continued recordbreaking run to fresh all-time highs The rally has made India the world’s fourth-largest equity market The influx of foreign investment should support demand for futures contracts

SGX Nifty futures had a daily average turnover of about $3 9 billion notional last year Average open interest was two and a half times that The futures accounted for the second-largest chunk of the Singapore Exchange’s equity derivative volumes, after the SGX FTSE China A50 Index futures

Large volumes of orders from Singapore will now be routed into India SGX and NSE will split costs and revenues roughly equally Fees and profits for the Indian exchange and local brokers should rise India wants to become a bigger presence in global markets The local financial sector has been growing faster than expected New listings hit a record last year The finance sector is supported by a growing population A headcount of 1 4 billion people means India has overtaken China to become the world’s most populous nation Economic growth of 5 9 per cent is forecast for the current fiscal year That is ahead of China, which is struggling with record youth unemployment and tensions with the US India will have to work hard to win a reputation as a financial hub on a par with Singapore or Hong Kong before the latter was partially absorbed by China

As per the Reserve Bank of India’s latest financial stability report, Indian banks’ gross non-performing assets have fallen to a 10 year low of 3 9 per cent in March 2023 The improvement has been across the board with bad loans falling in both public and private sector banks, and in major sectors of the economy India has emerged as the fastest-growing major economy in the world and is expected to be one of the top three economic powers in the world over the next 10-15 years