Subprime meltdown to have limited impact here: Shome
The impact needs to be assessed in terms of direct and indirect exposure of branches of Indian banks to the subprime mortgage market.
By TNN |
BANGALORE: The ongoing US subprime crisis would have limited impact on Indian banks operating overseas, according to Parthasarathi Shome, advisor to the Union finance minister. Speaking at a CII conference on “Impact of US subprime crisis on India and other emerging markets,” Mr Shome said, the Union government had collated information from four Indian banks operating overseas.
“The impact needs to be assessed in terms of direct and indirect exposure of branches of Indian banks to the subprime mortgage market,” he said.
Noting that while on one hand there would be a surge in the stock market, thanks to movement of funds from combat zone (US) to safe havens (like India), Mr Shome added that managing this kind of hot money would be a cause for concern for monetary authorities. He said, once global liquidity was moderated, the Indian economy would have to depend on domestic funds to maintain or accelerate the rate of growth. It would be naive for the global financial community to relax thinking that issues like the US subprime would not recur.
Chris Wood, MD and equity strategist with CLSA, observed that the easing of interest rates by the US Federal Reserve would not bring relief in the long run. “The next round of such easing would help China and India. Asia has the best growth story with India and China leading the way,” he observed.
Rajiv Malik, executive director with JP Morgan Chase, said, a slowdown in the US would impact other economies. “While it would impact sectors like IT in India aggressive cost cutting by US companies would increase outsourcing opportunities for Indian firms,” he added.
“The impact needs to be assessed in terms of direct and indirect exposure of branches of Indian banks to the subprime mortgage market,” he said.
Noting that while on one hand there would be a surge in the stock market, thanks to movement of funds from combat zone (US) to safe havens (like India), Mr Shome added that managing this kind of hot money would be a cause for concern for monetary authorities. He said, once global liquidity was moderated, the Indian economy would have to depend on domestic funds to maintain or accelerate the rate of growth. It would be naive for the global financial community to relax thinking that issues like the US subprime would not recur.
Chris Wood, MD and equity strategist with CLSA, observed that the easing of interest rates by the US Federal Reserve would not bring relief in the long run. “The next round of such easing would help China and India. Asia has the best growth story with India and China leading the way,” he observed.
Rajiv Malik, executive director with JP Morgan Chase, said, a slowdown in the US would impact other economies. “While it would impact sectors like IT in India aggressive cost cutting by US companies would increase outsourcing opportunities for Indian firms,” he added.
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
