India, is a developing country, that is strongly built through its exports, has a constant rate of economic growth per year, and the country that was least affected by the global financial crisis, out of the three. When looking at 2008 to 2010, even though this was when the crisis transpired, India was still able to have a GDP growth rate over 2%. This did not mean that India was able to avoid the financial crisis, but rather dampen the effects of it, relative to the United States of America. In this section, we will take an in depth look at finance for lending , India’s banking system, and the financial systems in place during 2008.
India’s banking structure is drastically different then the United States of American and very unique compared …show more content…
There is a Central bank in India, called the Reserve Bank of India; this central bank is given power to control and manage many aspects of the banking system, one in particular credit policies. The Reserve Bank of India is known as one of the strongest central banks in the world, due to the fact of its sound policies and management that it employs. The Reserve Bank of India was one of the only banks to put a pause on loans before the crisis occurred, forecasting what might take place. This bank as mentioned before has a lot of power and because of this would not allow just anyone to get credit, unless they met the standards. India capital ratio is about 12.5%, they base lending on income, and do not provide home equity loans. When it comes to mortgages, banks require at least 20% down payment, along with appropriate income to support the loan. Joe Nocera and others have shown, based on Indian culture, Indians aren’t as comfortable with debt, compared to how Americans are. …show more content…
This prevented many people from getting large mortgages, that eventually they wouldn’t be able to pay back, forcing them to default on there loans. When the crisis took place in 2008 India’s mortgage debt to GDP ratio was only 6%. Not allowing people to take large mortgages, that they couldn’t afford, helped keep their mortgage debt to GDP ratio extremely low, relative to all other countries at this time. The ability to prevent many people from defaulting on loans, was due the the fact that they have strong banking policies and standards, being stern throughout before it became a
India’s banking structure is drastically different then the United States of American and very unique compared …show more content…
There is a Central bank in India, called the Reserve Bank of India; this central bank is given power to control and manage many aspects of the banking system, one in particular credit policies. The Reserve Bank of India is known as one of the strongest central banks in the world, due to the fact of its sound policies and management that it employs. The Reserve Bank of India was one of the only banks to put a pause on loans before the crisis occurred, forecasting what might take place. This bank as mentioned before has a lot of power and because of this would not allow just anyone to get credit, unless they met the standards. India capital ratio is about 12.5%, they base lending on income, and do not provide home equity loans. When it comes to mortgages, banks require at least 20% down payment, along with appropriate income to support the loan. Joe Nocera and others have shown, based on Indian culture, Indians aren’t as comfortable with debt, compared to how Americans are. …show more content…
This prevented many people from getting large mortgages, that eventually they wouldn’t be able to pay back, forcing them to default on there loans. When the crisis took place in 2008 India’s mortgage debt to GDP ratio was only 6%. Not allowing people to take large mortgages, that they couldn’t afford, helped keep their mortgage debt to GDP ratio extremely low, relative to all other countries at this time. The ability to prevent many people from defaulting on loans, was due the the fact that they have strong banking policies and standards, being stern throughout before it became a