Impact of Capital Market Exposure on the Indian Commercial Banks

Banks are the largest financial institutions and working as the backbone of the economy. They provide various financial and advisory services to their customers. As financial institution banks are also exposed to different risks. One of such risks is concentration risk. This risk arises due banks concentration of lending towards any specific entity or group of entities which carry same line of business. There are global as well as Indian evidences that banks have suffered due such risk. Capital market is one of the sensitive sectors as described by the Reserve Bank of India where banks make financing. It is called sensitive because volatility in this sector could harm the asset quality of the banks. This present work is a humble effort to find out the effect of banks investment in the capital market on their performance.