Why it is hard to lend to the right borrowers4 min read 27 Mar 2014, 02:10 PM IST
The decline in relative importance of industry in the country's GDP has caused problems for banks that we probably have not acknowledged
Is avoiding borrowing a secret of corporate success? Not in classical corporate finance theory, but going by the stellar, consistent success of information technology, consumer goods and pharmaceutical industries over the last 15 years, it would seem so. They have stood their ground during the recent downturn; the few black sheep within these industries who did leverage or participated in the misadventure called foreign currency convertible bonds met their brutal comeuppance. Actually, miners and exploration companies too could have joined this elite club of non-borrower successes, but for the government deciding to convert them to toxic waste.
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