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India’s banks face their biggest test
Even before the pandemic, the country had among the highest ratios of bad loans in the world
In early March last year, the central bank had to intervene to rescue Yes Bank, one of the country’s largest private lenders © EPA-EFE
January 15, 2021 12:01 am by Benjamin Parkin in Mumbai
Even before the pandemic, India’s banks were struggling. With among the highest ratios of bad loans in the world, at least five lenders have had to be rescued from collapse since late 2018. Several more were in a precarious state. Already creaking under the strain, the sector now faces one of its biggest tests: emerging intact from the crisis.
A strict lockdown in place for several months from March was devastating for the businesses of borrowers big and small. This in turn prompted a historic economic contraction — forecast by the IMF at 10.3 per cent for the year ending in March — that was worsened by the spiralling Covid-19 caseload. But while emergency government relief measures for borrowers helped soften the immediate blow to banks, this support is now being phased out.
Even before the pandemic, the country had among the highest ratios of bad loans in the world
In early March last year, the central bank had to intervene to rescue Yes Bank, one of the country’s largest private lenders © EPA-EFE
January 15, 2021 12:01 am by Benjamin Parkin in Mumbai
Even before the pandemic, India’s banks were struggling. With among the highest ratios of bad loans in the world, at least five lenders have had to be rescued from collapse since late 2018. Several more were in a precarious state. Already creaking under the strain, the sector now faces one of its biggest tests: emerging intact from the crisis.
A strict lockdown in place for several months from March was devastating for the businesses of borrowers big and small. This in turn prompted a historic economic contraction — forecast by the IMF at 10.3 per cent for the year ending in March — that was worsened by the spiralling Covid-19 caseload. But while emergency government relief measures for borrowers helped soften the immediate blow to banks, this support is now being phased out.
