Financial crisis

ASSOCHAM has given the report that 25 to 30% jobs could be slashed but under the GOI pressure they have taken back the report but the industries are following the report. I am not an expert of either economy or industry but whatever I am writing that is based on my little bit experience of banking Industry.

The RBI has taken every step to infuse the money in banking system by reducing CRR and SLR but the situation is not under control. Most of expert says that Indian banking system is strong and the impact of global crisis would be very minimal but the reality of banking system is yet to be come. 

Real sector companies have borrowed Rs 75000 crore from banks and Rs 25000 crore from mutual fund companies. The NPA of banks might be increased in the end of December quarter because of recession in the economy. The default might be come from corporate as well as retail side. The real sector companies are feeling heat as the bubble of real sector has been burst and there is less number of customers in the market i.e. they are giving offer like 1BHK is free on 2 BHK to bring out their cost. The Banks will pressurise to pay their debts as they are facing crunch of money. The major problem of banks is that their asset-liability mismatches which may hurt their profit. Over the last three year, banks funded their long term credit via short term liabilities, mostly deposits, large part of which were corporate bulk deposits and certificates of deposits.

The retailers, who are losing their jobs or getting slash their salary, might be defaulters in coming months. This kind of defaults, we will see in real sector loan, auto loan and personal loan. The uncertainty about jobs and salary also affect these sector’s growth and manufacturing industry also. The overall impact of this crisis would be more what we expect now.