Glut of bank deposits, softer rates ignite asset bubble worries

Banking liquidity surplus currently stands at Rs 2 lakh crore -five times higher than the Rs 40k crore average. NSEBSEMotilal OswalLoading data…

    ADD TO PORTFOLIO

    ADD TO WATCHLIST

    SHARE YOUR OULOOK

    EXPAND

    ChartsValuation & Peer ComparisonCommunity BuzzPEER COMPANIESL&T Finance HoldingsLoading data…

      ADD TO PORTFOLIO

      ADD TO WATCHLIST

      SHARE YOUR OULOOK

      EXPAND

      ChartsValuation & Peer ComparisonCommunity BuzzPEER COMPANIES The glut of bank deposits after demonetisation and a continued spell of benign interest rates have increased the risk of an asset bubble in India, the risk being the highest in new areas of lending such as affordable housing.

      «I agree that there are risks building up because everybody is looking for growth and when this happens, people are not willing to price these risks appropriately. This risk is now building up,» said Sanjay Agarwal, managing director at AU Financiers, a newly listed small-finance bank.

      Banking liquidity surplus currently stands at Rs 2 lakh crore -five times higher than the Rs 40,000-crore average before the November 8 currency swap. It had increased to Rs 4.5 lakh crore in the first quarter of the current fiscal.

      The benchmark repo rate at 6 per cent is currently the lowest in seven years, making it easier for banks and non -banking finance companies to borrow.

      L&T Finance Holdings MD Dinanath Dubashi said the lending products getting fashionable are the ones to be cautious on. «It was consumer credit, credit cards and micro finance recently. Now I am afraid about affordable lending because everyone is joining that bandwagon. Of course, the good players will be more cautious but not everyone will be careful,» Dubashi said.

      Agarwal, Dubashi, RBL Bank MD Vishwavir Ahuja and Capital First chairman V Vaidyanathan were in a financial sector discussion at the Motilal Oswal Investor Conference in Mumbai.

      Ahuja said that as a bank, RBL is always Rs paranoid.’ «We are frankly always cautious but there are risks.There is a lot of liquidity and some others have burnt their fingers in the past,» said Ahuja, who turned the sleepy Kolhapur-based lender into a market favourite.

      However, V Vaidyanathan from Capital First did not agree that the risk was high.

      «Tell me one bank or NBFC that is seeing a problem in home loans.Indian lenders have been sensible and they continue to be sensible.There have been times when the unsecured book between 2003 and 2013 has increased for which we are paying the price today, but there is no large-scale risk,» he said.

      Добавить комментарий