In search of risk capital

Did a shortage of equity capital in India contribute to banking stress? What happens in the next investment upturn?

Were the banking problems that India is in the middle of inevitable? Is there more to this situation than just corrupt promoters, ownership of banks, and regulatory sloth? As we seek closure to the lending excesses of the previous economic cycle, and set the base for the next investment upturn, answers to these questions are necessary.

There are basically two sources of capital for investment: Debt and equity. The more common definitions are from the perspective of the supplier of capital. Debt is the ‘safer’ option: The return on capital is capped but return of capital is much more certain, as