Hi guys! This is my second 3-day quote challenge. I would like to thank Abhishek for nominating me. This is the first day of the 3-day quote challenge.
1.A quote each day for three days.
2.Nominating three different people each day.
3.Each day you have to nominate three different bloggers.
4.Let the bloggers know you have nominated them.
If you owe your bank a hundred pounds, you have a problem. But if you owe a million, it has.
– John Maynard Keynes
If a company owes some bank, say 20 million rupees, the company is at pressure because it has to repay back. As it is relatively a smaller amount when it is compared to thousands of millions of rupees, the banks wouldn’t have much of a problem if there are defaulters. They would consider them under bad debts. But, if the defaulter owes 7 thousand million rupees like the “King of good times”( Vijaya Mallya), it is problematic to the banks. Now, it is not anymore the fate of the borrowers that is at question but also that of the bank’s. The banks will have to keep up with the principals and interests of the deposits. There are chances that because of the bad debts, they might lose their credibility. Even if they sue the person or company, it is not necessary that they would immediately repay the loan. It also happens that the banks wouldn’t take proper security from large public limited companies because they are well known.
The Leyman brothers crash in 2008 ,which had a debt of 618 million dollars is one of the major causes for financial crisis in 2008. Due to this, there was a major bummer in the banking sector.