雅虎香港財經 Bank Stocks Under Pressure in India as Draft Loan Rules May Bite
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Indian banks have emerged as a big source of risk in the country’s stock market, following a recent selloff caused by proposed rules that may raise provisioning for loans backing certain projects.
A gauge of state-run banks, which are key financiers of large infrastructure projects, has lost 4.8% this week, heading for its biggest slump in nearly two months. A broader banking sector index has slipped 1.6%, while the benchmark Nifty 50 gauge has shed 0.9%.
Behind the lenders’ weakness is the Reserve Bank of India’s release of draft rules last week that proposed minimum exposure for banks in a consortium to fund commercial real estate or large infrastructure projects. Analysts say the rules, if adopted, may lead to higher provisioning requirements for banks.
Lenders have expressed reservations on the “onerous nature” of the rules and can significantly scale back project finance credit if the rules are implemented in the current form, Macquarie Group Ltd. analyst Suresh Ganapathy wrote in a note.
As part of the proposal, for a project where total loan given is up to 15 billion rupees ($180 million), every lender must have at least 10% exposure. For projects where aggregate exposure is over 15 billion rupees, the individual exposure floor shall be 5% or 1.5 billion rupees, whichever is higher, the RBI said.
“While this is prudent from a risk management perspective, coming from the regulator’s experience in the last credit cycle, we believe this can be detrimental to growth in the capital intensive infrastructure sectors in the economy,” according to JM Financial analyst Sameer Bhise.
--With assistance from Anup Roy.
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