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Are Indian Banks not hit by meltdown?

Created by : Dheeraj Singh, Product Manager, Citibank  | 11 26 2008 11:52:18 +0000
Industry : BankingFunctional Area : Business Models(Strategy & Execution)
Keywords : Banks Not Credit Crunch INDIAN Banks Economic Meltdown Hit Meltdown Global Crisis Downturn INDIAN Banking Sector
Activity:  728 views;  last activity : 07 06 2010 20:18:09 +0000

The global financial meltdown has not affected the Indian banking sector and the country's economy will continue to grow - at the most pessimistic forecast at 7 per cent-plus, the head of India's largest commercial bank, State Bank of India (SBI), has told a Brussels-based news portal.

Indian banks not hit by meltdown: State Bank chief 

Full story here: http://www.newkerala.com/topstory-fullnews-51594.html

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Beacuse of strict norms of govt in the form of SLR & CRR. We are in better state than banks in US. Such measures, designed to protect the depositors’ interests while ensuring adequate liquidity to the banks, are not available in the US. While our banks are allowed to use only two-thirds of the deposits, the US banks lend five to six times the deposits they accept. This means there is ample scope for reckless lending in the US. Their subprime lending - lending without regard to the repayment capacity of the borrower and adequate security against the loan given - was the root cause of the present turmoil. Indian banks do not have a scope for this type of lending and are therefore safe to this extent. 
By Rajat Das, Product Manager, Aviva  | 11 27 2008 12:11:40 +0000
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I agree with murali.....Comparing the Indian banks with those of other countries, there are some check lists that if we go through say that Indian banks are strong like their peers in Canada, Australia and China. If I were to ask, do Indian banks have big exposure, have they made imprudent balance sheet decision, are the retail customers losing confidence in banks, the answer would be “no”. However, if I were to ask this question in about five other countries, the answers would be “yes”.
By Prasenjit Saha, Product Manager, ICICI Bank  | 11 26 2008 13:14:19 +0000
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The Indian economy, which is expected to grow at over 7% per annum, provides better growth prospects for banks than Europe and the US  where the economy is in recession. The market has obviously over-reacted to the financial crisis and Indian banks are unaffected.  There is enough liquidity infused & now Indian banks are well capitalised, both in the public and private sector, to meet the needs of the depositors as well as credit-seekers.
By Murali Ramamurthy, Product Manager, Canara Bank  | 11 26 2008 12:18:51 +0000
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it is naive to think that our financial system, of which banks are an important part, will remain totally unaffected once they are allowed to have overseas exposure. The stock markets have taken a direct beating. There was a boom when the foreign institutions invested heavily and there was a bust when they sold heavily to meet their obligations following the US crisis. The heavy demand for dollars made them dearer in rupee terms, resulting in a steep fall in the Indian currency. Banks have dealings related to the stock market, so they are not totally outside the danger zone.
By Swati Raut, Product Manager, Aviva  | 12 04 2008 09:15:31 +0000
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I don't think so it was just mere statements from him. In real scenario Credit crisis has created a situation where banks are afraid to make new loans or new investments. This fear causes many businesses and consumers to cut spending dramatically or even close their doors. There is no proper circulation of money & this deters growth for banks also......
By Dheeraj Singh, Product Manager, Citibank  | 11 26 2008 11:52:18 +0000
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