Haircut needed to resolve NPAs, says Rangarajan

A haircut is the term for write off a lender accepts on a debt payment when a borrower can't repay

Former Reserve Bank of India governor C Rangarajan says 'some haircut' is inevitable in the process of resolving the big load of bad loans at government-owned banks.

A haircut is the term for the writeoff a lender accepts on a debt payment when a borrower can't repay what is due at a point in time. Needed here, said Rangarjan, since the size of non-perofrming accounts (NPAs) had become so big.

"The clean-up has to be done and perhaps some haircut is inevitable. The question is whether the banks are ready for a haircut and how that is managed. The best result is