The deepening crisis in India's banking sector

A financial crisis always affects economic growth for long periods. Attempts to shut the stable door by eliminating LoUs etc will simply raise the costs for exporters

The last fortnight has seen selling by retail investors who panicked when the Telugu Desam Party pulled out of the National Democratic Alliance and the dimensions of the banking scams kept expanding. Other political news also made the Bharatiya Janata Party (BJP) look a little more fragile as it suffered reverses in three by-polls and a No-Confidence Motion was proposed. 

The fears of a global trade war sparked by the US President, Donald Trump’s protectionist tariff proposals, also spooked Foreign Portfolio Investors (FPI) to some degree. So, despite the release of encouraging GDP and manufacturing data and a trend of