NPA Crisis

Parekh cautions on RBI’s bad loans tack

  1. Context: Rising NPAs of public-sector banks
  2. Background: RBI Governor’s effort to clean up banks’ balance sheet
  3. Expert Opinion: The objective of the clean-up shall be to fix the financial rot, not to incapacitate banks
  4. Parekh warned that recapitalization is not a long term solution, which means that it is taxpayers that are bailing out the banks
  5. Future: Govt should freely allow the right talent to come in to run PSU banks and prospective new investors who are bringing capital, shall be given a role in running those banks

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