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Context is everything.
Detailed stories on technology startups, business and economic current affairs.
Detailed stories on technology startups, business and economic current affairs.
Lenders stand to gain a lot more than borrowers in the current challenging market environment
India’s equity market today resembles a roller coaster that frequently stalls at the bottom. Sharp sell-offs and weeks-long losing streaks seem to have become the norm, with the benchmark Nifty 50 and the BSE Sensex down about 15% this year. But that hasn’t deterred investors from pledging their mutual funds to secure loans. In fact, the segment is witnessing double-digit growth.
It’s not a problem by itself. Loans against mutual funds are a handy way for investors to instantly access money without redeeming their investments. But a falling market changes the story. Borrowers could be forced to liquidate their investments …
Frequent portfolio reshuffles and primary market allocations have driven returns. The question is whether this approach can hold up over the long term.
A market dominated by speculative activity is enriching sophisticated traders at the expense of retail investors, distorting exchanges and brokerages, and putting household savings at risk.
The acquisition of IDBI Bank puts his Fairfax smack dab in the middle of the RBI’s rules on bank ownership. It must now decide whether to sell CSB Bank or merge the two lenders, neither of which will be easy.
