Yes Bank Event Might Have A Second Round Effect On The Economy, Says Pankaj Murarka

Putting Yes Bank Ltd. under moratorium will have a bigger effect on the financial system over a period of time, according to Pankaj Murarka of Renaissance Investment Managers.

“When you freeze a $40 billion institution like Yes Bank, it is bound to have a second round effect on the economy, which is my concern,” Murarka, chief investment officer at the fund house, told BloombergQuint.

Markets were not expecting this to happen the way it played out, he said, adding that it raises questions on the ability of regulators and policymakers who have been significantly behind the curve.

There is a capital shortfall with Yes Bank but not all the assets are junk, Murarka said. It might need a capital of $2-3 billion and should be able to deal with the implications, he said.

Globally markets are tumbling due to the novel coronavirus, but in all this gloom India comes across as a steadier and a promising growth story from a medium- to long-term perspective, he said. As things settle down in the next few weeks, India, according to Murarka, will attract more capital.

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