More than two years ago, the Reserve Bank declared war on what it had winked at till then: the fudging of bank balance sheets. Since then, banks have disclosed bad loans on a previously unimagined scale. The entire government-owned banking system (excluding State Bank of India) is now in the red. But worse is to come. These banks together have bad loans totalling more than Rs 7 lakh crore, but banks have provided in their books for varying fractions of the total. Bear in mind that the government banks’ collective net worth (without SBI) is only Rs 3.8 lakh crore.
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