The Global Financial Crisis of 2008 - Its Causes, Impact on Indian Economy, RBI Measures and Lessons Learnt

2. 
KAUSTUBH BARVE 11

MEET BHADRA 13

REWAT BHARSAKLE 15

ADITYA BHIMANAWAR 17

3. 
INTRODUCTION

KEY EVENTS / CAUSES

IMPACT ON INDIAN ECONOMY

RBI MEASURES TO CONTAIN THE CRISIS

LESSONS LEARNT

CONCLUSION

4. 


Also known as the US Meltdown - Worst Financial Crisis since the Great
Depression of 1930s
According to IMF officials, the losses due to the crisis amounted to $945
billion in USA alone, but may run into trillions of dollars when all the
countries are considered together.
The impact of this crisis was so severe that it led to the collapse of top
investment firms like Lehman Brothers, Bears Sterns while others such as
Citi Group, JP Morgan were rescued by the government and AIG

6. 
Between January 2002 and mid-year 2006, housing prices increased by a whopping
87 percent.
The boom had turned to a bust, By the third quarter of 2008, housing prices were
approximately 25 percent below their 2006 peak.
20.0%
15.0%
10.0%
5.0%
0.0%
-5.0%
-10.0%
-15.0%
-20.0%
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

7. 
It increased only slightly during the recessions of 1982, 1990, and 2001

The rate began increasing sharply during the second half of 2006

It reached 5.2 percent during the third quarter of 2008.
6%
5%
4%
3%
2%
1%
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0%

9. 
SPECULATION

CENTRAL BANK POLICIES

GOVERNMENT POLICIES

12. 
Impacts on Indian trade:

10 billion C.A.D
Foreign exchange reserves depleting to 53 billion.

Impact on India’s export:




•
•
•
decline 15% in 08.
imports grew by $6.1billion to $21.5 billion.
Impact on jewelry,handloom and tourism
50,000 artisans lost their jobs.
4.6% drop in handloom exports.
8% to 10% dip in tourism.

13. 
IT-BPO Sector:
•
70% of companies started negotoating at lower rates.
60% cutting back on contracts.
Only 40% increase thier offshore vendors.

Exchange rate depreciation :
•
•
•
•
•
20% depreciation in rupee.
Creating panick in impoters.
Rupee breaching the line of 51 per $.

16.  Monetary
 Fiscal
Measures
Stimulus packages of Dec ‘08 and Jan ‘09

17. 
Strong rebound in investment demand

Domestic private demand remained dampened


Inflation started increasing due to high liquidity and money
supply
Monetary measures withdrawn; SLR, export credit refinance
limit, etc., restored to pre-crisis levels.

18. 
Sustained increase in food prices and manufactured goods

CRR raised to contain excess liquidity

Repo and reverse repo rates were increased

Risks from sluggish global economy, rebound in global
commodity prices, volatile capital flows and high domestic
food prices remain significant.

20. 

Monitor Loan Performance carefully and make loans to high
quality borrowers
Governance structure of the risk management system needs
to be improved
--The Role of Risk Managers……..!

21. 
Credit rating agencies themselves need to be re-examined

Global problems require global coordination

Transparency