It is increasingly a good time to deposit money and an increasingly costly affair to take a loan. Banks are finding that their avenues for lending are more curtailed.
The banking sector in India is likely heading into a trap. That the trap is not one of its own making is a small mercy — the looming problem looks quite unavoidable. A combination of coincidental factors, most of which aren’t in control of the banking sector, could soon lead to a situation where banks have the liquidity to lend but find it difficult to get borrowers. At a time when global growth is falling sharply and India’s isn’t picking pace either, a slowdown in bank credit delivery is the last thing we need.
TCA Sharad Raghavan 