KPR's Blog


Marketing of loans by Banks

Posted in Uncategorized by K P Ramachandran on August 27, 2009
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We have not forgotten the debacle of Banks and financial institutions in US in FY 08 and 09. This was mainly due to the aggressive marketing of home loans by financial institutions there  and their decision to waive scrutiny of home loans upto 100 thousand $ presuming that property prices will always go up.This was proved wrong and what has resulted is history. Normally we Indians learn these mistakes very late. After a gap of about 6 – 9 months many financial agents/consultants here started calling for business loans. Last one week I got atleast 8 to 10 calls encouraging me for business loans. I told one of those guys about the dangers in such ruthless marketing of business loans. As per reports many Banks are having unpaid personal loans and their NPAs are  increasing. This trend should be discouraged failing which India will also follow American way and have the financial disaster. Any business organisation should also have the financial discipline failing which it can  break down like what happened in Subhiksha case. If we take loans beyond the debt – equity ratio of 2:1 there is always risk. Banks should discourage this trend forthwith for their good as well as for the country.


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