By Deep Narayan Mukherjee
As per RBI deputy governor SS Mundra, total distressed loans account for 14% of banking sector assets in India. Such a high level of bad debt was last observed in India way back in 1999 (Source: World Bank). However, every crisis also provides an opportunity to improve a system. There is high expectation about the Insolvency and Bankruptcy Bill being passed in Parliament.
Additionally, the regulators are showing clear intent in taking actions against truant borrowers. However, many problems of finance are problems of information asymmetry, the genesis of which lies in the regulations themselves. Arguably, the intensity of the banking systems current problems may have been less if certain aspects of credit defi…
Read the full article at: http://blogs.economictimes.indiatimes.com/et-commentary/proper-legal-definitions-could-be-the-answer-to-the-menace-of-npas/