Anasayfa / Teknoloji / to clean up India’s $27bn debt mountain Bad bank’

to clean up India’s $27bn debt mountain Bad bank’

The Indian bank, which has $ 2 trillion (£ 1.46 trillion) in deposits in more than 150,000 branches and serves more than 1 billion customers, is impressive.
In fact, they are in trouble.
After years of reckless lending to a failed project, a handful of banks have tens of billions of dollars in bad debt. State banks account for more than 60% of acidic debt. Since 2018, five banks have been rescued from the collapse. The non-performing loan recovery rate has traditionally been low, reaching one-third of total loans, a slight (40-45%) improvement after the assets were liquidated by the 2016 bankruptcy law. And now, in the coming months, pandemic-affected borrowers may continue to default and increase debt.
Are Indians Losing Trust in Banks? Between 2005 and 2009, the remedy that more than $ 35 billion of taxpayers’ money was paid only to banks to revive problematic banks was not very helpful. Last July, Fitch Ratings said a troubled Indian bank would need between $ 15 billion and $ 58 billion to invest new money. Currently, the government plans to set up a long-standing “bad bank” to manage $ 27 billion in bad debt and clean up the balance sheet of commercial banks.
Still, it’s a quarter of India’s estimated $ 100 billion non-performing loans on commercial bank books. The resulting credit crunch not only hindered banking operations, but also undermined growth. Private investment has declined as risk-averse banks do not want to lend freely.

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