The emphasis of policymakers even before the PNB fraud was on audits, integrity, legality, judicial process, bankruptcy laws and the like. Bad loans have been huge but surprising as it may sound, relatively speaking, not very many frauds have happened in the larger picture on banks in India. Based on the market capitalization of listed firms, banks could make estimates of the market values of unlisted firms, and lend to these accordingly. When loans are given to firms in India, bankers often have in mind the real estate holdings of such firms. These holdings are typically evaluated considering their market prices.

Source: Mint March 09, 2018 03:33 UTC