Bankruptcy is a cat that every bank and financial institution wants to bell at the earliest to offset losses. Thousands of crores of rupees are written off by banks under the guise of bad loans, when the institutions are unable to recover the outstanding dues from companies and individuals.
Recently, even Reserve Bank of India governor Raghuram Rajan spoke about how bad loans are ailing banks and the banking system in general and how he intends to clean up the balance sheets at the earliest. This lead to a spiral effect as banking stocks fell drastically, but the reforms are much needed.
The need for the law:
AFP
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