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SMEs, real estate to drive asset quality deterioration in India, China: S&P

Emerging markets face slippage, volatile capital flow risks

msme, sme, manufacturing, jobs, women, salary, employees, workers
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In China, total exposure to SMEs is small but has risen rapidly in the past few years as the government encouraged lending to this segment.

Abhijit Lele Mumbai
Against the backdrop of the Coronavirus (Covid-19) pandemic and its aftermath, small and medium enterprises (SMEs) will lead asset-quality deterioration, particularly for countries like Turkey, South Africa, India, China, Indonesia, and Thailand.

Tourism and export-oriented SMEs are more vulnerable in this challenging environment, according to rating agency Standard and Poor’s (S&P).

Apart from SMEs, real estate is another source of asset quality pressures for banks in emerging markets. However, the immediate risks appear manageable, S&P said.

Stress in Indian SMEs is somewhat tempered by the government's guarantee of new loans taken by SMEs, up to 20 per cent of their aggregate loans, thereby

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First Published: Jan 20 2021 | 12:43 PM IST

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