Grim forecast

RBI's financial stability report points to worsening NPAs

The government’s move to recapitalise public sector banks to enable them to lend afresh and institutionalise a system to reduce stressed loans through time-bound Insolvency and Bankruptcy Code justifiably raised hopes of a solution to the twin balance sheet problem. The balance sheets of both public sector banks and quite a few large corporate houses are in terrible shape and were seen as a major obstacle to investment and reviving growth. But the latest Financial Stability Report (FSR) of the Reserve Bank of India (RBI) has raised some pertinent questions about such moves having a sustainable solution. And it is