Worse, the loan-loss cover for ICICI’s $6.6 billion in bad loans is less than $2.7 billion; StanChart’s cushion is almost $700 million thicker. And let a bad bank take care of the stress that’s already accumulated. Gadfly has previously argued that a state-sponsored bad bank would be a mistake. Last quarter, ICICI managed to offload less than $4 million of bad debt, and another $90 million of special-mention loans. If those new tools turn out to be inadequate to fix the leak, the overflow of bad assets will start to look like a deluge.

Source: Mint May 04, 2017 09:25 UTC