The tumbling of the Sensex
Today was an unprecedented day in Indian financial history,
with the benchmark Sensex tumbling by its biggest weekly fall in
over 18 years. This fall, triggered by financial disharmony
worldwide is hitting investors and companies very hard, and has
even prompted an immediate RBI response of a 100 bp cut in the cash
reserve ration (CRR), an attempt to combat the rapid drying up of
liquidity in an extreme bearish market.
ICICI Bank, India's largest private sector bank and definitely the bank most exposed to global finance, lost 28% of its value in a single day - prompting fears of a bank run, which would only exacerbate the situation further . Rajeshree Varangaonkar and Bharat Indurkar have an interesting article in Mint, where they discuss how the RBI has laudably protected private banks in India from the global meltdown, using a variety of monetary policy instruments. Another interesting article in Mint discusses fair-value accounting and the IFRS framework, whose eccentricities are laid bare in such a situation of financial fragility.
ICICI Bank, India's largest private sector bank and definitely the bank most exposed to global finance, lost 28% of its value in a single day - prompting fears of a bank run, which would only exacerbate the situation further . Rajeshree Varangaonkar and Bharat Indurkar have an interesting article in Mint, where they discuss how the RBI has laudably protected private banks in India from the global meltdown, using a variety of monetary policy instruments. Another interesting article in Mint discusses fair-value accounting and the IFRS framework, whose eccentricities are laid bare in such a situation of financial fragility.
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