BackThe Week in Review for 11 November 2011
The Week in Review for 11 November 2011
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With economic conditions worsening, India’s banking industry has received a downgrade from a leading rating agency. On Wednesday Moody’s Investor Service cut its forecast for the Indian banking sector from “stable" to “negative". It said lower growth was hurting asset quality and profitability. The agency also added that government borrowing was eating into funds for private borrowers. According to Moody’s, a “negative" outlook means volatility and uncertainty. It says the effects of the slowdown will become apparent over the next one-and-a-half years, and that banks would be forced to hike their provisioning during this fiscal and the next one.
It’s been a bad week for Kingfisher Airlines. On Monday the cash-strapped carrier decided to begin canceling dozens of flights until 19 November. On Tuesday alone, it stopped running 50 flights. These included major routes out of big cities like Mumbai, Delhi and Bangalore. The move was a last-ditch measure to save some money. Kingfisher is already defaulting on payments to oil companies and is falling behind on paying salaries.
The gloomy outlook for India’s economy has become worse. New data shows industrial output has decelerated to its lowest growth in two years. The index of industrial production nudged up a mere 1.9% in September. The revised figure for August is 3.6%.
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