BS Infra Summit: How lending trends in 2010s created bad loan crisis

The paper notes that the problem was not just weak lending choices; core project risks were built into the model

Addressing structural issues in infrastructure financing will ensure sustainable, long-term economic growth, according to a new working paper by the Centre for Social and Economic Progress (CSEP). 

The study, ‘Non-Performing Assets in Indian Banking in the 2010s: The Role of Infrastructure and Public-Private Partnerships’, traced how the boom in bank-led financing of infrastructure projects — especially through public-private partnerships (PPPs) — created massive non-performing assets (NPAs) in public sector banks (PSBs). 

Gross NPAs in commercial banks surged from 2.5 per cent in 2010-2011 to 11.2 per cent in 2017-2018, with PSBs faring worse at 14.6 per cent. Nearly half of