India will inject another 700 billion rupees ($10.2 billion) into state bank.
India will inject another 700 billion rupees ($10.2 billion) into state banks, giving them a bigger cushion to absorb loan losses and bolster credit growth at a time when the country's shadow banks are in retreat.
Boosting credit growth is a key goal of Prime Minister Narendra Modi's government, as it seeks to revive the economy and offset the effects of a shadow banking crisis that has been unfolding since September.
Loan growth at Indian banks accelerated to nearly 9% in the six months ended March 31, more than double the 4% rate in the previous six months, according to the Reserve Bank of India. But that may not have been enough to offset the decline in credit extended by the struggling shadow banks, according to CARE Ratings analyst Mitul Budhbhatti.
A year after a series of defaults by Infrastructure Leasing & Financial Services that exposed the weakness in India's shadow banks, the problem is deepening with other NBFCs such as Dewan Housing Finance Corp. and Anil Ambani's Reliance Capital Ltd. struggling to find new money.