After the 2008 crisis, banks have cut back on riskier advances such as credit card loans, commercial real estate and even the textiles sector. However, they seem to be sold out on the infrastructure story. Exposure to this segment has seen the maximum spike over the past three years.
Indeed, this will rise further as the Planning Commission targets a $1 trillion (Rs 46 trillion) spend over the next five fiscal years. While the sector as a whole may be able to bear any downside from slowing order books and declining profitability of infra firms, individual banks are at higher risk.
Also See | In Infra we trust (PDF)
These loans are typically large advances made to few firms, leaving banks more vulnerable to bad loan spikes, Fitch Ratings Ltd points out.
Graphics by Ahmed Raza Khan/Mint
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