4 min read.Updated: 02 Sep 2021, 01:49 AM ISTMadan Sabnavis
Below-cost lending in India could have economic repercussions beyond the financial burden imposed on bank shareholders
We have a situation in India today where the policy repo rate has been kept low, which is reflected in the cost of deposits and consequently lending rates. Getting a home loan at a rate of less than 7%, at a time when the economy appears to be fragile and risk levels are high, is a bonanza. Banks are just about managing their non-performing assets (NPAs) and there is uncertainty in the air. There is talk of loan melas, where credit must be given. The question that arises is whether we are pricing capital adequately.