Thursday, September 18, 2008

Sensible Indian Regulation Shows The West The Way Banks Should Be Run!

Banking in India, Past, Present & Future

Because Indian banks are heavily regulated in terms of the types of assets they can invest in, domestic Indian banks have largely been insulated from the credit contagion that is sweeping the globe.

Posted by ross travill @ 04:54 AM (546 views)
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3 thoughts on “Sensible Indian Regulation Shows The West The Way Banks Should Be Run!

  • Interesting – but it isn’t doing their currency Vs USD much bldy good. Which is a shame because it’s losing me lots of money.

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  • Capitalistpiglet says:

    It has to be said, a year ago the same article would be berating India for its red tape.

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  • The article was berating India for its red tape. I think if a point was being made it was that the red tape has had the perverse effect of insulating Indian Banks from the worst. The headline is a little misleading. What India needs to do is learn from the mistakes that more evolved western banking systems have made, spreading risk around simply because you can do so and there are fee’s to be earned in doing it is not a sound way to run a financial system. If your banking system has not evolved to that point yet you can avoid what looks to be an almost catastrophic innovation. India was well on its way to the same fate, Citibank India has already begun securitising its auto loan book. Mortgage books are still relatively small small but growing extremely fast, it wouldn’t be very long before the vast majority of risk that would ordinarily lie on a banks balance sheet was parcelled out and no one knew who was sitting on what, and when defaults begin to occur in whatever segment everybody runs for the hills and no one is safe regardless of whether underlying all the hubris, the financial institution is fundamentally sound. That is what happened in America. they hailed the process of disintermediation, India would do well to avoid it.

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