Restructured Loans, Non-performing Assets and Indian Banking

Abstract

How bad is the current situation in build-up of non-performing loans in Indian banking? At the current juncture, this issue is increasing haunting Indian policy makers, bankers, corporates as well as informed public. A recent Issue of the Economist declared, “Indian public-sector banks are sitting on something unpleasant”. 1 Interestingly, the recently published Annual Report of the Reserve Bank of India (RBI) also noted, “The deterioration in asset quality of the banks emerged as a concern within and outside the Reserve Bank during 2011-12”. Are such sentiments erring on the right side of over-cautiousness? Or, is “something rotten in the state of Denmark”?