4 min read.Updated: 09 May 2017, 04:33 AM ISTLivemint
The government seems to be hoping that the Reserve Bank of India will solve what is essentially a collective action problem
The timing of the new ordinance empowering the Reserve Bank of India (RBI) to get more actively involved in the stalled resolution process can hardly be faulted. After all, recalcitrant bankers have allowed bad loans to fester on their balance sheets for far too long. These bad loans—an estimated Rs9.64 trillion—are now the biggest single threat to Indian economic stability. The potential costs of a clean-up have also mounted.
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