yv don’t buy reddy’s argument…
If EMIs increase by 20-25%, isn’t rise in NPAs a natural fallout? If interest o
n advances doesn’t increase in the same proportion(or better) as cost of borrowings do, aren’t margins bound to remain under pressure. So do we say that banks are to be blamed for slowdown in retail credit & rising NPAs?
No, its actually the reactive decision making by the Reserve Bank of India that has taken its toll on Indian banks and ultimately consumers. It was from December onwards that RBI realised that the ‘Inflation’ has actually gone out of control and began its ‘surprising’ movements, whereas there was evidence of the same since the beginning of June 2006. Besides, isn’t the widening trade & current account deficit enough to give RBI signs of overheating? In fact, the demand- supply mismatch is more broadly captured in current and trade deficit, rather than inflation, which is up only in the last few months. While in the last three years, it was liquidity driven demand growth, the government failed to accelerate the country’s production capacity. And overheating is unlikely to be resolved by three months of aggressive tightening.
n advances doesn’t increase in the same proportion(or better) as cost of borrowings do, aren’t margins bound to remain under pressure. So do we say that banks are to be blamed for slowdown in retail credit & rising NPAs?No, its actually the reactive decision making by the Reserve Bank of India that has taken its toll on Indian banks and ultimately consumers. It was from December onwards that RBI realised that the ‘Inflation’ has actually gone out of control and began its ‘surprising’ movements, whereas there was evidence of the same since the beginning of June 2006. Besides, isn’t the widening trade & current account deficit enough to give RBI signs of overheating? In fact, the demand- supply mismatch is more broadly captured in current and trade deficit, rather than inflation, which is up only in the last few months. While in the last three years, it was liquidity driven demand growth, the government failed to accelerate the country’s production capacity. And overheating is unlikely to be resolved by three months of aggressive tightening.
Source : IIPM Editorial, 2007
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative
Labels: Arindam Chaudhuri, Guru and Economist, IIPM, IIPM-Article, IIPM-Business Management School, IIPM-Press Release, renowned management guru
Rashmi Bansal Publisher Of JAMMAG Magazine Caught Red-Handed, for details click on the following links:-
posted by Pankaj @ 11:30 PM
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