Abstract
What began as a sub-prime crisis in the US housing mortgage sector in the second half of 2007 has turned successively into a global banking crisis, global financial crisis and now a global economic crisis. With the spread of the contagion from the financial to the real sector, it is now expected that global recession will be more protracted and the recovery path fairly long. As the global crisis persists with no turnaround in sight, banks around the world, including those in India, are taking earnest measures with a view to crisis resolution. As the much touted decoupling theory has failed the test in today's globalized world, India too is weathering the negative impact of the crisis. There is, however, an important difference between the crisis in the advanced countries and the developments in India. While in the advanced countries the contagion traversed from the financial to the real sector, in India the slowdown in the real sector is affecting the financial sector, which in turn, has a second-order impact on the real sector.
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