Readings: Bank NPAs, RBI & US Fed meetings this week, Gold prices
- Business Standard: Banks fear wilful defaults after anti-recovery activism
. . . an organised platform sprang up in Mumbai, which is urging defaulters to get in touch with them for help if they are being ‘harassed’ by banks for recovery of overdue loans. At stake is about Rs 45,000 crore of loans, the estimated exposure banks and non-bank finance companies (NBFCs) have to India�s own sub-prime borrowers.
This would increase NPLs, which in this sub-prime segment are already above tolerable levels. Banks have seen defaults in this segment rising to 15 per cent from less than 10 per cent till the last quarter of 2006-07.
Apart from NBFCs like Citifinancial, the banks which have exposure to this segment are ICICI Bank and HDFC Bank. Banks increased their lending to low-income borrowers during the last few years of the retail credit boom.
- Economic Times: RBI cues, Fed move to decide course
The market is eagerly waiting for policy cues from RBI’s mid-term review of monetary policy on Tuesday. Market observers are not expecting the central bank to hike interest rates this time around. It remains to be seen whether RBI raises cash reserve ratio (CRR) so as to suck out excess liquidity in the banking system. The US Federal Reserve is also convening a policy meeting on Wednesday.
Gold prices zoomed to their 17-month high at Rs 10,040, and are expected to rule firm owing to good demand from stockists in view of the upcoming Diwali festival and ongoing wedding season.
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