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Tag: farce

View: A bad loan farce gets another rerun in India

View: A bad loan farce gets another rerun in India

Finance
by Andy MukherjeeA new year, a new central bank governor. Yet the first salvo to come out of the Reserve Bank of India’s policy arsenal in 2019 is encouragement of good old “extend and pretend” lending. Banks and shadow banks are being allowed a one-time restructuring of loans of up to 250 million rupees ($ 3.6 million) to micro, small and medium enterprises that were in default on Jan. 1, without having to mark them as nonperforming, the RBI said on Tuesday. Lenders are being given an extension of 15 months (up to March 31, 2020) to pretend that these stressed loans are standard. All they have to do is to make additional 5 percent loss provisions. By contrast, a secured loan classified as nonperforming attracts immediate provisioning of 15 percent, rising progressively t...