Banking system liquidity remained buoyant.The Bloomberg check-up of the sector’s health also showed that: “Government steps just address the liquidity problem the sector was facing, so it’s better to wait rather than increase investments." “There are asset-quality issues that are emerging," said Rajeev Radhakrishnan, head of fixed income at SBI Funds Management Pvt., India’s biggest money manager. Many are worried that the financial impact of the pandemic on companies has been masked by central bank’s deferral on loan repayments for individuals and businesses. In its latest move last week, the Reserve Bank of India provided 100 billion rupees of special liquidity to organizations that fund mortgage lenders and housing finance companies, and permitted banks to restructure some loans.ĭespite an improvement in the sector’s health, which was hit by a credit crunch since 2018 when a large infrastructure financier defaulted, there are lingering concerns among investors. The government in mid-May announced 3 trillion rupees ($40 billion) of collateral-free loans to the nation’s small businesses and a 750 billion rupee special credit line to non-bank financiers.
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