Banks, corporates and even the government were staunchly opposed to it from the very outset. Under the earlier processes, lenders could change the tenor and rates for easier payments by the borrower.These methods failed to reduce the problem, leading to a spike in bad loans over time. The situation became so bad that over 10% of total bank loans turned into NPAs at one point. Both borrowers and lenders misused these schemes because it helped them conceal the true state of affairs. Many companies tried to avoid the NPAs tag by sidestepping the rules.

Source: Economic Times April 02, 2019 06:01 UTC