Photo: BloombergAsset quality of banks is an important indicator of the efficiency of financial intermediation in an economy. Easy restructuring of loans using forbearance on asset classification helped banks escape the correct classification of advances as NPAs. Insolvency and Bankruptcy Code (IBC), 2016: The IBC was enacted in December 2016 to expedite resolution of stressed assets, and provide an exit route to failed entities. The resolution process is at different stages with bidders often shifting stance and seeking legal recourse, alleging injustice in acceptance of bids. Once action is taken under IBC, banks must make a provision of 40% of loan amount and file a resolution case with NCLT.
Source: Mint May 16, 2018 09:00 UTC