Helping You Build Wealth With Honest Research
Since 1996. Read On...

MEMBER'S LOGIN

MEMBER'S LOGINX

     
Invalid Username / Password
   
     
   
     
 
Invalid Captcha
   
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Revealed
India's Third Giant Leap

This Could be One of the Biggest Opportunities for Investors




Important: We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
By submitting your email address, you also sign up for Profit Hunter, a daily newsletter from Equitymaster
covering exciting investing ideas and opportunities in India.

AD

Who is to blame for doubling EMIs?
Wed, 11 May Pre-Open

A couple of days back the Indian stock markets reacted sharply to the RBI's interest rate policy. The fact that companies will now have to pay more to borrow did not go well with investors. Possibility of higher payments for existing loan was even more worrying. This had the potential to dampen the profit growth for companies over the next few quarters. Their inability to borrow more would also hamper their near term growth prospects.

But little thought was spared for the retail borrowers who had seen their interest payouts shooting up in the recent months. In case of most individual borrowers, the equated monthly installments (EMIs) payable have shot up by 30% to 40%. For ones nearing retirement these may have shot up by as much as 50% to 100%. This is because the latter have no room for lengthening the tenure of the loan. Who better to comment on the status of individual borrowers than ex ICICI chief Mr K.V. Kamath? According to the veteran in retail lending, the risks have soared in this space over the past few months. So much so that banks now need to get wary of higher NPA risks in retail space.

The retail investors blame greedy banks for their plight. The bankers accuse RBI of being too conservative with its monetary policy stance. The RBI finds the US Fed guilty of pumping in hot money into developing economies and fuelling inflation. And so the blame game goes on.

We do agree with the RBI on the fact that the necessity of higher borrowing rates stemmed from the US' callous money printing. However, the responsibility lay on our own banks to ensure that the retail borrowers are not misled by low interest rates.

If one bank chooses to offer dirt cheap rates on home and car loans to utilize its surplus float, others follow suit. This is certainly the very nature of a competitive market. However, if banks compromise margins to gain market share and in the bargain also mislead retail borrowers, the same is best avoided.

We believe that central banks in the US or Europe cannot be blamed if NPA ratios in Indian banks are to rise in coming days. It is for our banks to ensure that individual borrowers keep their EMI obligations well within their comfort limits.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

View all commentaries | Archives

Read the latest Market Commentary


Equitymaster requests your view! Post a comment on "Who is to blame for doubling EMIs?". Click here!

  
ABOUT EQUITYMASTER

Since 1996, Equitymaster has been the source for honest and credible opinions on investing in India. With solid research and in-depth analysis Equitymaster is dedicated towards making its readers- smarter, more confident and richer every day. Here's why hundreds of thousands of readers spread across more than 70 countries Trust Equitymaster.

PREMIUM PRODUCTS
QUICK LINKS
POPULAR TOPICS
TRENDING TOPICS
FREE NEWSLETTERS
EQUITYMASTER SUPPORTS
  • HelpYourNGO
  • You Tube
  • Linkedin
  • Twitter
  • Telegram
  • Google Play

Copyright © Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited).

Whitelist | Refer | Terms | Privacy | Contact | About | Sitemap

Phone +91-9136015013

Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited) (Research Analyst)
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Email: info@equitymaster.com. Website: www.equitymaster.com.
CIN:U74999MH2007PTC175407

Name of the Compliance & Grievance Officer: Ms Sonal Ramachandran
Telephone: +91-22-61434003 | Email: compliance@equitymaster.com

LEGAL DISCLAIMER:
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

All rights reserved. Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited) (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.