Source: Allianz Research, Mint

The current U.S. banking crisis, global economic downturn, and tight monetary conditions are impacting the worldwide banking system. This situation often reduces credit growth and leads to increased insolvency filings, a trend observed in major Asian economies, especially India and Japan. In India, insolvency filings surged by 50% in 2022. Managing these insolvencies through the sale of distressed assets can mitigate risks for depositors and offer a revival path for struggling businesses. This crisis presents an opportunity for investors to acquire assets at significantly lower prices, with potential for capital creation in the system and about 2% of total credit allocation turning bad, offering a ripe market for distressed asset investors.