The Government of India and the Reserve Bank of India (RBI) have brought about several measures to resolve non-performing assets (NPAs). Several NPAs may have arisen from credit facilities that were sanctioned by banks as a commercial decision taken in good faith and in the ordinary course of conducting banking business. Equally there could be cases where NPAs arise as a result of siphoning of funds by the borrower or promoters or other connected entities.

Several serving and retired bankers have recently been charged and/or arrested on suspicion of criminal misconduct over alleged loan fraud under the Prevention of Corruption Act, 1988 (Principal Act). There have been instances of arrest of bank officials without any proof of quid pro quo or wrongdoings.


Continue Reading

The Indian banking system has been riddled with non performing assets (NPAs) for some time now. To help lenders, the Reserve Bank of India (RBI) has introduced a variety of debt restructuring policies, including the flexible structuring of project loans  and the strategic debt restructuring scheme. But these schemes have met with limited success, mostly due to the lack of funds available for promoters to invest, non-cooperation on the part of the borrowers and the sub-optimal levels of operations in the relevant companies.

The lukewarm economic environment has further amplified these woes. As such, ‘bad’ loans across 40 listed banks in India had increased to Rs. 5.8 trillion (approximately USD 85.9 billion) in March 2016 from Rs. 4.38 trillion (approximately USD 64.9 billion) in December 2015. Estimates show that weak assets in the Indian banking system will reach Rs. 8 trillion (approximately USD 118.5 billion) by March 2017.


Continue Reading