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Instead of creating Bad Bank, govt should help PSBs resolve their NPAs

Otherwise, the government would be party to the exceptionalism of Indian PSBs and taxpayers would continue to pay for the lack of due diligence in assessing credit risk in recovering huge unpaid debts

Topics
Psb  |  Public Sector Banks  |  Private Banks

Jaimini Bhagwati  |  New Delhi 

Jaimini Bhagwati

Higher lending for long-term investments in India would obviously nudge growth upwards. At end-March 2010 and 2011 growth in lending for (PSBs) was booming at 19.9 and 21.5 per cent (year-on-year) and for the comparable numbers were 12.9 and 23.9. By March 2017 credit growth for PSBs was down to 1.5 and has recovered somewhat to about 5 per cent by March 2018. For private banks, the same numbers for 2017 and 2018 were 17.3 and 22 per cent (Source: RBI Financial Stability Report released on June 26, 2018). However, the outstanding stock of private bank loans is much lower than for PSBs and are mostly shorter term for working capital, consumer credit and less for long gestation e.g. steel, power and cement projects.

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First Published: Fri, June 29 2018. 05:55 IST
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