Hard lessons for banks and FIs from a decade of bad infrastructure loans

Loans to the sector became huge NPAs largely due to the practice by lenders of offering unconditional mobilisation advance and time gap between preparation of a DPR and awarding the bid

banks, bad loans, NPAs, IBC, assets
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Subhomoy Bhattacharjee New Delhi
How does a corporate loan become a bad one? Or, have the loan appraisals at banks improved, or is it just plain luck that the level of non-performing assets in the financial sector has come down! 

The process of loan evaluation is usually a black box. There are some exceptions. For instance, we know that the ratings of a company play a critical role in deciding the rates of interest that will apply. Or the classification of the sector as infrastructure. On the flip side, a high risk one affects the rates too. If it is the former, the rates dip even more. 

From Business Standard, we asked officers of an all-India financial institution to walk us through a loan process for

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First Published: Jan 26 2022 | 8:11 PM IST

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