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No doubt the Reserve Bank of India (RBI) has been working overtime to stem the fall of the rupee. But as we wrote to you earlier, the new RBI governor will have to focus on the imminent risks in the books of PSU banks. The sharp deterioration in the asset quality of these banks has been evident over past few quarters. The bankers themselves are hardly willing to concede the poor quality lending and problems with restructuring. But if data from the RBI is anything to go by, for Indian banking sector, there may be a NPA crisis in the offing. While the gross NPAs recorded in the books of banks are yet miniscule, the quantum of restructured assets is huge. In fact for the infrastructure sector alone, the percentage of loans that are either bad or restructured is up to 5 to 8 times more than the gross NPAs. We hope Governor Raghuram Rajan gets the bankers to smell the coffee!
Source: Reserve Bank of India
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