the headlines are that psu banks have more bad loans than admitted or provisioned for. the reality is that the carribean cricket league is one beneficiary of the largesse. the challenge is that the rbi governors term expires in september
$117 billion today needs an admitted $34 billion over time which presumes a 70% recovery rate. it is the unadmitted and reserve provisions that concern. the distressed asset markets cap bids at 15% (conflicting system design). another $50 billion (1.5x) will be needed to fess up to the fun provided $117 does not grow at a greater rate
status quo ante
http://blogs.barrons.com/emergingmarketsdaily/2016/02/18/india-will-bad-bank-loans-derail-growth/?mod=yahoobarrons&ru=yahoo
The Financial Times writes that this is a crisis that could derail India’s place among growing emerging markets. The FT notes that India’s state banks control the majority of stressed assets, which soared from 6 per cent in 2011 to 14 per cent in September, “one of the worst levels in Asia. The distressed loan pile is now estimated to have hit about Rupees 8 trillion ($117 billion). Last yearFitch Ratings said an extra Rupees 1 trillion in new funds were needed to patch up balance sheets.”
Prime Minister Narendra Modi’s government said this week that it could pump as much as $34 billion more into banks, because of bad loans, Reuters reports. Last August, the government pledged 700 billion rupees ($10.2 billion) for state-run banks, through March 2019, as part of bank reforms.
http://indianexpress.com/article/business/banking-and-finance/npa-rbi-loan-bad-loan-band-aid-wont-do-banks-need-deep-surgery-says-raghuram-rajan/
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