Experts urge caution on low interest rates, warn of liquidity crisis

Ultra-low rates run the risk of enticing firms to borrow too much, they say

The abundance of liquidity and ultra-low interest rates have surely averted a liquidity crisis in the market, but could be brewing another one, experts are warning.   

Ultra-low interest rates, on the face of it, looks good for now for the firms. They now could raise as much funds as they want without making a hole in their balance sheets. But are they borrowing too much? Experts think so, and as former Reserve Bank of India (RBI) deputy governor Viral Acharya warned earlier this week, it may come back to “haunt us.” The key concern here is that the borrowings