RBI raises alarm over corporate loans

AGENCIES

Mumbai: Dec 22: The Reserve Bank of India (RBI) today said Indian companies may find it difficult to repay loans as rising input cost is putting pressure on their profit margins.
 "The outlook of the firms shows signs of weakness which can be attributed to rise in input prices, interest rates, slackening demand and some infrastructural constraints.
 Servicing of loans by them, therefore, may come under stress," said the RBI's Financial Stability Report (FSR).
 It said the profit margin of the corporate sector has dipped, which indicates its reduced pricing power in the wake of rising raw material and input costs.
 "The rising share of interest cost in sales as well as gross profits so far, implies that the impact of monetary tightening on the margins of corporates are now becoming visible," the RBI said.

Lastupdate on : Thu, 22 Dec 2011 21:30:00 Makkah time
Lastupdate on : Thu, 22 Dec 2011 18:30:00 GMT
Lastupdate on : Fri, 23 Dec 2011 00:00:00 IST



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