Magazine article American Banker

Indian Banker Says Sanctions Hurting U.S. Banks the Most

Magazine article American Banker

Indian Banker Says Sanctions Hurting U.S. Banks the Most

Article excerpt

By KRAUS, JAMES R.

U.S. banks may prove to be the biggest losers if the United States intensifies economic sanctions against India, according to a senior Indian banker.

"Sanctions are a problem for U.S. banks, because they are losing business," said Sampatkumar Gopalkrishnan, executive director of Bank of India, India's third-largest bank company. "They are not a problem for Indian banks."

In an interview in New York last week, Mr. Gopalkrishnan also disclosed that big European banks have been actively seeking to profit from uncertainty about U.S. economic sanctions.

As speculation has increased that U.S. banks will cut down on short-term loans to Indian banks, he said, British, French, and German banks have indicated they are more than willing to step in to meet any shortfall.

Mr. Gopalkrishnan added that Indian banks, as net lenders in the international interbank markets, have no reason to worry about foreign banks cutting credit lines.

The sanctions, which bar financial transactions with Indian government agencies, were imposed on India and Pakistan after both countries resumed testing atom bombs in defiance of international agreements.

Rating agencies like Thomson BankWatch give Bank of India high marks for a steady improvement in profitability, asset quality, and capital over the last three years. But they also caution that asset quality needs to be closely monitored since much of the lending tends to be government- directed. …

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