http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a1klhu6HEEoU
Banks will need to set aside cash for 25 percent of loans that have been classed as “doubtful” for up to one year from 20 percent earlier, the Reserve Bank of Indiasaid yesterday after raising borrowing costs 50 basis points. Mumbai-based IndusInd Bank Ltd. and Pramerica Asset Managers Pvt. predict corporate borrowing costs will reach 10 percent by June.
The new provisions will hurt some industries more than others, according to IndusInd Bank. Property developers are set for “large-scale distress” sales as they need to repay 1.8 trillion rupees ($40.4 billion) of debt in the coming two to three years, according to the local unit of London-based Knight Frank LLP.
“Because of the rate hike, if there is a slowdown in growth and if there is a huge impact on a particular sector, there is a possibility” companies will have trouble repaying debt, Mahendra Jajoo, the Mumbai-based head of fixed-income investments at Pramerica Asset Managers, a unit of Newark, New Jersey-based Prudential Financial Inc., said in an interview yesterday.
Banks will need to set aside cash for 25 percent of loans that have been classed as “doubtful” for up to one year from 20 percent earlier, the Reserve Bank of Indiasaid yesterday after raising borrowing costs 50 basis points. Mumbai-based IndusInd Bank Ltd. and Pramerica Asset Managers Pvt. predict corporate borrowing costs will reach 10 percent by June.
The new provisions will hurt some industries more than others, according to IndusInd Bank. Property developers are set for “large-scale distress” sales as they need to repay 1.8 trillion rupees ($40.4 billion) of debt in the coming two to three years, according to the local unit of London-based Knight Frank LLP.
“Because of the rate hike, if there is a slowdown in growth and if there is a huge impact on a particular sector, there is a possibility” companies will have trouble repaying debt, Mahendra Jajoo, the Mumbai-based head of fixed-income investments at Pramerica Asset Managers, a unit of Newark, New Jersey-based Prudential Financial Inc., said in an interview yesterday.
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