Astonished to see prominent Bankers and Economists taking a view that the Govt and RBI should take a hands off approach and do nothing to help Companies in danger of defaulting. This is precisely the kind of thinking that led to the Great Depression of 1929
During the Lehman crisis, the Fed, the US Govt and the largest Banks lost no time in pumping liquidity into the system and barely Managed to stave off Financial Contagion.
Similarly after the collapse of RBS, the Chancellor of the Exchequer and the BOE worked thru the night and by the morning came up with a Rescue Package which restored confidence in the Financial System
Our Socialist leaning Bankers and Economists seem to have no clue as to how Financial Markets work and having squandered huge sums of Public Money now seem to think that this should not be spent to rescue the Financial System
A Default by even one large NBFC will have a domino effect and will take with it several otherwise healthy Companies and God forbid some Banks. It will shut down demand which is largely funded thru Credit and quickly cause many other sectors to turn sick
The consequences are too horrific to imagine. By all means, take over unhealthy Financial Companies, punish the Promoters and Shareholders but do not allow another ILFS type default to happen. If this requires the entire team of RBI to be sacked, let's do it and get on with it
Even previous dispensations understood that such an event couldn't be allowed to happen and were quick to ensure swift resolutions when GTB, Centurion Bank and BoR threatened to go under. I suspect the present attitude and unwillingness to act is related to forthcoming Elections
