Bad Loans Impede India’s Economic Growth
Finance ministry asks PSU banks to monitor companies’ fortunes; aims to prevent bad loans
Mounting bad-loan ratios at Indian banks are a sign the country’s economy isn’t doing nearly as well as recent rosy output-growth figures suggest.
The sour debt also threatens future expansion, as banks throttle back lending and the government pours billions of dollars into bailouts for state-run banks.
The strategy, dubbed Indradhanush (rainbow), focuses on systemic changes in state-run lenders, including a fresh look at hiring, a comprehensive plan to reduce stress at bloated lenders, capital infusion, accountability incentives with higher rewards, including stock options and cleaning up governance. Details
