Special address by Dr K C Chakrabarty, Deputy Governor of the Reserve Bank of India, at a Seminar on "IDBI's role as Development Financial Institution" organised by the United Forum of IDBI Officers & Employees, Kolkata, 27 September 2013
........ Let me now return to the problems faced by the DFIs in India. The DFI concept in the Indian context suffered from some inherent structural infirmities. As the DFIs were set up as public sector enterprises, the market perceived the borrowings made by them as having implicit government guarantee. This induced a sense of profligacy in the behaviour of the DFIs while borrowing. Further, in the absence of a competitive environment for project lending, the entities became quite complacent and disregarded the viability of the projects financed, while pricing. The crossholding of shares amongst the DFIs also led to a contagion effect in creating NPAs...............
No comments:
Post a Comment