China is absolutely right... I can only pray that situation should not come to Indian neighbours....
While G.O.I is bailing out Indian banks with taxpayers Money plus starting a collection agency, but in all that doom and gloom at home, its so nice to see Indians are worried about their neighbours
With more than 150,000 branches loaded with $2tn (£1.46tn) worth of deposits and serving over a billion customers, India's banks look impressive on paper.
In reality, they are in a mess.
A clutch of banks is saddled with tens of billions of dollars of bad loans after years of injudicious lending to dud projects. State-owned banks account for more than 60% of the sour debt. Five banks have been rescued from collapse since 2018.
The bailouts - more than $35bn of taxpayers' money was injected to revive ailing banks between 2005 and 2009 alone - haven't helped much. In July last year, Fitch Ratings said India's struggling banks would need between $15bn-$58bn in infusion of fresh funds by 2022.
Now the government plans to float a long talked-about "bad bank" which will try to tame $27bn of bad loans and clean up the balance sheets of commercial banks.
This would still be a quarter of India's estimated $100bn of bad loans on the books of commercial banks. The resultant squeeze on credit has not only hobbled banking but undermined growth: private investments have nosedived as risk-averse banks are unwilling to lend freely.
We all know Chinese deals are entices to corrupt leadership of these countries. Chinese are like the village pawn shop who would lend money to incompetents of the family knowing fully well that they can't pay back, yet do so just to capture the family assets. Societies despise such people.
Its Nice to see you are aware of situation outside your country
https://www.bbc.com/news/world-asia-india-58654740
At less than 60% India's credit to GDP ratio remains low, yet its banks have some of the highest non-performing loans in the world.
A "bad bank" - also described as an asset reconstruction company - typically buys bad loans from affected banks at an agreed price. Then it liquidates or sells assets that borrowers have offered as securities against loans. The proceeds from the sales help the banks recoup some of the money they had lent to companies.
This is not the first time India has faced a bad loan crisis or launched a "bad bank". In fact, there have been 28 such firms, all privately owned, in the past two decades, but recoveries have been underwhelming.
This time, the government has formed two companies - one which will acquire the bad loans and will be state owned; and the other, partly privately owned, will try to sell the assets.
The government will pay the difference between the expected value of assets by the commercial bank and what the "bad bank" will be able to raise from the asset sales.
www.scmp.com
