Banks up to tricks with bad loans again?

The recapitalisation of banks, the slow absorption of bad loans in the system, and the normal growth that comes from a growing economy have led us to believe that PSBs are sailing smoothly

Last month, the Reserve Bank of India (RBI) organised a conference of the directors of public-sector banks (PSBs). In his inaugural address, the RBI governor made some startling comments. He said: “One of the critical areas where the role of directors is very significant is in ensuring the integrity of financial statements … We have come across instances where so-called smart accounting methods were adopted to artificially boost the financial performance of the bank.” What had RBI inspectors discovered? In the words of the governor, they had come across tricks “to conceal the real status of stressed loans”, such as:

*Bringing