Syndicated loan volumes in India have declined by nearly 46 per cent in the nine months ended September compared to the year-ago period, a top foreign banker said.
The prevailing credit squeeze in the domestic banking industry is likely to continue in the near-term until stability gets restored in the global markets, Bank of America's Managing Director, Global Corporate and Investment Banking Group-India, Asit Bhatia, told reporters here today.
"Loan volumes have come down significantly during the past one year from around $30 billion to around $15 billion this year. Given the present global turmoil, this situation is likely to prevail in the near-term," Bhatia said.
In order to ease the credit shortage in the domestic banking system, India's central bank reduced its key rates in several tranches in recent weeks.
The fiscal and monetary steps taken in the recent past have infused around Rs 2 lakh crore into the system, thus enabling banks to lend to fund-starved sectors.
Fund-raising activities steadily declined in recent months in the domestic market and may become "worse in the fourth-quarter of 2008 as the loan market continues to weaken as priorities shift to preserving capital", Bhatia said.
Besides India, Australia and Hong Kong also witnessed the maximum decline in syndicated loan volumes during the nine months-ended September, he said.