The Indian government’s crackdown on
non-performing assets (NPAs) has been criticised by market
participants, who believe that meeting the deadline imposed on
state lenders will be a daunting task.
The Reserve Bank of India (RBI) has issued an ultimatum to
all public banks to remove their growing volumes of bad loans
from their debt portfolios by March 31 2017, when the current
fiscal year ends.
But counsel in India argue that the rising pile of soured
loans has been years in the making, and that it is a huge
challenge for large NPAs-laden public banks to complete a
clean-up within a one-year timeframe.
"The question is what do banks need to do," said Devidas
Banerji, partner at Khaitan & Co. "Do they need to be more
perceptive and innovative themselves on the question of
liability management? What steps do banks need to take to
better manage their liability in...