When an entrepreneur gets an order, he uses working capital from banks which finances the raw material inventory and work-in-progress. It has entirely to do with the state of the banking system, especially public sector banks (PSBs). Soon, most projects were getting stuck, especially in power and highways; and banks found their loans going sour. According to the RBI’s Statistical Tables Relating to Banks in India 2015-2016, NPAs were 3 per cent of gross advances of all banks in India in 2013. Besides, the amounts thus spent can be recouped by putting the requisite number of shares of those banks as public offers.

Source: Indian Express October 06, 2017 18:45 UTC