IIPM fights meltdown, places 2300 students By Education Mail Bureau
Slowing economic activity in India has had a ripple effect on loan portfolios of banks, says a report by Credit Analysis and Research (CARE). The report states that the total number of Non-Performing Assets (NPAs) with banks in India will triple from 1% of total advances in FY08 to 2.7-3% by FY11. Retail loans are expected to be most affected due to the job losses and salary cuts that are defining the mood of India Inc. The total rise in credit card and personal loan NPAs will be the highest touching 10-12% according to the report. The report pegs the growth in banks’ advances to 15-17% in 2009-10, and 19-21% in 2010-11, with infrastructure sector driving growth.
But there is a twist in this tale given the recent bullishness in the economy, thanks to a stable government, the manna of 6.8% quarterly growth and rapid stock market recovery. According to V. Krishnan of Ambit Capital, “a three-fold increase in the gross NPAs (as indicated in the CARE report) seems a little far-fetched. There is far more bullishness in the economy today (in terms of business confidence) which conversely generates confidence in lending. Frankly, we do not foresee deterioration in asset quality to that extent.” Are the pessimists listening?
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Source : IIPM Editorial, 2009
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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