MIHIR SHARMA: Inside India's slow-motion banking crisis
'Will India act to reduce government control over banks, and will it be clear and transparent about how it is spending its money?'
India has long been faced with a slow-motion bank crisis. In particular, the state-controlled institutions that dominate the sector have a bad-loan ratio that's almost twice as bad as their private counterparts. At last count, non-performing assets made up more than 10 percent of banks' advances, and were growing ever faster. Naturally, banks faced with this burden aren’t exactly eager to lend, so credit growth to the private sector has hit historic, multi-decade lows. Set against this, the central government's plan to recapitalize the banks it owns has long been considered laughably small -- just $1.5 billion was set aside in the last federal budget.
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