Economics
Banks Refusing to Lend Prompt $62 Billion Indian Rescue Deal
- Risk-averse lenders accept penalty rates to park cash with RBI
- Banks suffer from bad loan legacy, shadow lending crisis
A cyclist rides along an empty street past the Reserve Bank of India headquarters in Mumbai, India.
Photographer: Dhiraj Singh/BloombergThis article is for subscribers only.
India’s battle-scarred bankers are hoarding cash and reluctant to lend to smaller firms, forcing the government to ride to the rescue of millions of companies struggling for survival during the nationwide lockdown.
The lenders are accepting penalty rates to keep a record $92 billion a day with the Reserve Bank of India and have shunned a central bank program aimed at credit-starved corporates, choosing safety as the pandemic cripples economic activity.