Managing bad loans

Bank balance sheets would need to be quickly repaired

The economic disruption caused by Covid-19 is likely to push up non-performing assets (NPAs) in the banking system, as the contraction in economic activity is affecting revenues and the ability of businesses to repay debt. While a number of firms, which were in the middle of expanding capacity, would re-evaluate demand conditions and may decide to postpone investment activity, firms with stalled projects would find it difficult to service loans. The government has also suspended some sections of the Insolvency and Bankruptcy Code for six months, which would affect the bargaining power of lenders. Additionally, the Reserve Bank of India