Illustration: Luo Xuan/GT
India’s banking system has restructured more than 6 trillion rupees ($92.34 billion) in bad debts over the past three years. The recent $2 billion Punjab (PNB)-Nirav Modi fraud has made it worse.
Though statistical methods vary, even the lowest estimate of the bad debt ratio exceeds 10 percent. But it is unlikely that India faces a debt crisis since Prime Minister Narendra Modi’s reform of the banking system will have a positive effect despite some negative impact in the short term.
The rise in bad debt has several causes. India’s economy was affected by the financial crisis, and low economic growth then hit companies’ profits, undermining their debt repayment abilities. Easy monetary policy aiming to s…
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