India’s Banks Tread Rates, Elections Amid Liquidity Crunch: BI Replay

India’s economy remains on a structurally strong footing. Favorable demographics, an infrastructure build-out and policy focus on developing the domestic manufacturing sector are accelerating the country’s inclusion into global supply chains. The country's per-capita income surging above $2,500 and the financialization of household savings into equities remains a structural trend. The country is luring global talent with higher pay for senior roles than in Hong Kong and Singapore and its biggest banks are in a sweet spot to gain wealth-management market share. But, all is not well. The economy has been slumping in recent quarters, even as headline GDP growth has surprised to the upside. The Reserve Bank's policy mix of restrictive rates and tight liquidity conditions is driving a cycling slowdown and holding back a higher growth potential. With elections around the corner, what lies in store for the country's financial-services sector?