Daijiworld Media Network - Mumbai (SHP)

Mumbai, Dec 7: Earlier today, former Governor of RBI, Raghuram Rajan asserted that India's real estate, construction and infrastructure industries were in deep trouble. He cautioned non-bank finance companies (NBFCs) to review their asset quality before availing financial support to them.

There is also “significant distress in rural areas,” Rajan wrote in an opinion piece in India Today magazine. He said India is in a growth recession, defined as an economy growing at a slow pace and where unemployment is rising.

Rajan also pointed at the poor GDP growth at 4.5 per cent. He further stated that the crisis on the shadow lenders and the build-up of bad loans at banks are the cause of poor lending capacity in the economy.

He suggested the RBI carry out an asset quality review of the non-bank finance companies. However, on Thursday, current Governor of RBI, Shaktikanta Das asserted that the central bank closely monitors the top fifty non-bank financiers, which account for about 75% of total assets in the shadow banking sector.

“We have a fairly good idea of where the vulnerabilities lie,” said Das, reiterating that the central bank won’t allow any large or systematically important non-bank lender to collapse.