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Bloomberg
One of the most senior bankers in India has an antidote for the nation’s yearlong credit crisis that is showing no signs of abating: seek monies from overseas investors.
JPMorgan Chase &Co’s chairman for south and south-east Asia, Kalpana Morparia, is advising policy makers to tweak bankruptcy rules to let foreign portfolio managers throw a lifeline to the troubled shadow banking sector. The overseas investors could also step in to fill the financing void left by the non-bank lenders, she said in a recent interview.
The cash squeeze in the financial system triggered by the default of infrastructure financier IL&FS Group last year has already taken a toll on the country’s economic growth and has policy makers looking for ways to avert contagion. Shadow lenders like Dewan Housing Finance Corp and Reliance Capital Ltd are resorting to fire sales of assets to survive the credit crunch.
“I expect foreign portfolio investors to take over some of the space vacated by non-bank financing companies as well as act as a source of liquidity for them,†she said.