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Piling Stressed Assets of Indian Banks & the Way Forward Panda Bibekananda Chief Manager, Economist, State Bank of India Online published on 13 February, 2017. Abstract Mounting bad loans, corporate leverage and sluggish economic recovery are imposing pressure on Banks’ balance sheets. Recent ballooning of bad loans has made the system unstable. The heavy slippage has led to rise in the GNPAs of ASCB by 300bps to 7.6% of gross advances in March 2016 from 4.6% in March 2015. The passing of Insolvency and Bankruptcy Code 2016 by the Parliament is expected to give immense relief to the bankers as the reforms in the bankruptcy and insolvency regime are critical for improving the business environment and alleviating distressed credit markets. To adequately capitalize the PSBs and make them compliant with BASEL-III standards, the Government might consider some of the internationally proven methods including; Golden share arrangement, issuing tax free bonds and floating ‘B-class’ shares with limited voting rights. The economic recovery and correction in the corporate balance sheet are key to the recovery of the whole banking system not only India but worldwide. Top | |
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