India's Stressed Banks
Bloomberg Businessweek|November 04, 2019
“This is the classic crisis of confidence”
Abhishek Vishnoi, Marcus Wright, and Suvashree Ghosh

The government in India has pumped $37 billion into ailing banks in the past three years. Lenders have been forced into mergers, and the central bank has wrested more than a dozen companies from the control of tycoons who defaulted on their debt.

But cleaning up the financial system has been like playing whack-a-mole. India’s banks still sit on the biggest pile of bad loans, relative to total loans, among the major economies. They’re about 9% of debts.

And now S&P Global Ratings is warning that the country’s banks risk getting swept up in a crisis in a less-regulated pocket of the financial system known as shadow banking. Shadow banks are companies that lend money but typically don’t take deposits from savers—they’re funded by mutual funds and regular banks. After one major shadow lender, Infrastructure Leasing & Financial Services Ltd., neared collapse in late 2018, others began to have a harder time getting funding, and they’ve had to rein in their own lending.

Shadow banks make loans to everyone from consumers to real estate developers to manufacturers, so the pullback is being felt throughout the economy. There’s been a record slump in car sales, and residential building projects have stalled. A collapse in consumption has dragged the country’s gross domestic product growth down to 5%, from a world-beating 8.1% at the start of 2018. The Reserve Bank of India, the central bank, has tried to stimulate lending by slashing interest rates.

Continue reading your story on the app

Continue reading your story in the magazine

MORE STORIES FROM BLOOMBERG BUSINESSWEEKView All

The Hyperinflation Hype

Talk that the U.S. is going the way of Zimbabwe or Venezuela is bunk but bunk can move markets and influence policy

5 mins read
Bloomberg Businessweek
March 08, 2021

The Sheriff Wants a Word With Robinhood

Massachusetts regulator William Galvin says the free app is encouraging novice investors to trade themselves into trouble

5 mins read
Bloomberg Businessweek
March 08, 2021

The Geopolitics Of Chips

Taiwan and South Korea have amassed an uncomfortable degree of market power

5 mins read
Bloomberg Businessweek
March 08, 2021

THE SUPERCAR SPECIAL

Electrification is redefining what it means for a car to be extraordinary.

7 mins read
Bloomberg Businessweek
March 08, 2021

Tech's Latest Perk: Never See the Office

Silicon Valley companies are wooing executives with the promise of remote work forever

6 mins read
Bloomberg Businessweek
March 08, 2021

VACCINE CAPITALISM

Pfizer deserves every bit of the credit it’s receiving. But should a drug company decide who gets a shot?

10+ mins read
Bloomberg Businessweek
March 08, 2021

GOD SAVE MY PUBS

Tim Martin is fighting to keep Wetherspoons, his working-class British chain, alive. His detractors would bid it good riddance

10+ mins read
Bloomberg Businessweek
March 08, 2021

WHO GUARDS THE SECURITY GUARDS?

THE PEOPLE ASKED TO ENFORCE COVID SAFETY RULES PUT UP WITH LOW PAY, MINIMAL TRAINING, AND SOME DANGEROUSLY ANGRY CUSTOMERS

9 mins read
Bloomberg Businessweek
March 08, 2021

Can Clubhouse Keep The Party Going?

Silicon Valley’s hottest app is getting more than just money from its prominent investors

4 mins read
Bloomberg Businessweek
March 08, 2021

After a Grim Limbo, Hope

A migrant camp empties as Biden undoes Trump’s “Remain in Mexico” policy

6 mins read
Bloomberg Businessweek
March 08, 2021
RELATED STORIES

FIXING THE BANKING MESS

Public trust in India’s banks has been shaken by all the bad news about bank failures, misgovernance and a gargantuan Rs 9.4 lakh crore pile of bad debts. How to avert the impending catastrophe

10+ mins read
India Today
December 28, 2020

बैंकों में 14,500 करोड़ रु. की पूंजी डालने पर चौथे तिमाही में होगा फैसला

वित्त मंत्रालय को पीएसयू बैंकों में पूंजी डालने का लेना है फैसला

1 min read
Haribhoomi Delhi
December 14, 2020

एलवीबी को रवरीदेगा पीएनबी!

क्लिक्स संग सौदा नहीं होने पर आरबीआई ने पीएनबी को तैयार रहने के लिए कहा

1 min read
Business Standard - Hindi
September 30, 2020

Bank of India posts net loss of Rs 3,571 crore for Q4 over bad loans

The bank clocked a profit of Rs 251.79 crore in January-March 201819. In December quarter also, there was a profit of Rs 105.52 crore. Bank of India reported a standalone net loss of Rs 3,571.41 crore for the quarter ended March 31, 2020 due to higher provisions for bad loans.

7 mins read
Business Sphere
September - October 2020

The Rise Of AI

From resolving customer queries faster to improving learning outcomes in institutions to designing watches, AI solutions are increasingly being used across a large number of sectors in India. Express Computer presents the views and perspectives of leading CXOs as they share how their organizations are leveraging the full potential of AI

10+ mins read
Express Computer
December 2019

The Big Fat PSU Bank Mergers

A mammoth task -The four shotgun weddings performed by the Centre may create colossal banks. But given their huge losses and fragile balance-sheets, the road ahead could be rocky.

9 mins read
The Hindu Business Line
September 16, 2019

PNB Vesper: Betting Big On Research

Kochi-based PNB Vesper’s semi-virtual web of researchers, universities, and CROs across continents has some promising leads in the pre-clinical pipeline. Promoter PN Balaram says this cost-effective research model is the way forward to achieve India’s drug research goals

8 mins read
Express Pharma
September 16-30, 2019

Gurjinder Rises To The Occasion For IOC

His brace takes the side to a 3-1 win over PNB in the final

2 mins read
The Hindu
September 9, 2019