They now account for 11% of all state bank loans. Meanwhile, the state bank sector has become the government’s primary tool for many of its other plans. Recently, credit growth hit 5.1%, and the chief economist of India’s largest state bank, the State Bank of India, said that represented its lowest point since 1960. Recently, Reserve Bank of India (RBI) deputy governor Viral Acharya backed the creation of a “bad bank” to take non-performing assets off bank balance sheets. But it wouldn’t address the basic problem: figuring out at what price the bad bank should buy these assets.

Source: Mint February 28, 2017 02:48 UTC