In the last three years, public sector banks have written off Rs 1,14,000 crore as reported by The Indian Express on February 8. The Finance Ministry, RBI and SBI sent separate letters to the newspaper arguing that write-offs did not mean all was lost.
One of the most used terms in the banking and financial sectors over the last few years, leading RBI Governor Raghuram Rajan to express concern over the health of public sector banks. So what does it mean?
As Finance Minister Arun Jaitley gets ready to present his Budget, there appear to be some parallels from then — the banking sector crisis.
Subramanian & team back investment boost, Rajan-led economists caution
The working group, set up by the RBI, has called for introducing a call and put option format for trading over-the-counter (OTC) as well as on exchanges.
The RBI has taken steps to address bad debts. It is time government chipped in with structural reforms
Government must use multiple instruments to resolve the growing burden of non-performing assets
That is the amount of bad loans waived in last three financial years, more than the write-off in the previous nine
Inflation expectations are rising, and investment is sliding. That’s the challenge the budget must address
Rajan listed four conditions for free enterprise to be politically viable: Level playing field with easy entry and exit, protection of property rights, broadening access to capabilities and a basic safety net.
In July 1991, the RBI pledged 46.91 tonnes of gold with the Bank of England and the Bank of Japan to raise $400 million but the government was quick to repurchase it months later as the situation improved.
Rajan also said the RBI is tweaking the guidelines relating to the 5:25 refinance scheme and Strategic Debt Restructuring (SDR) to tackle stressed assets more effectively.
The economy is best served by lowering interest rates and blocking protectionism.
The Reserve Bank of India (RBI) on Tuesday kept key policy rates unchanged, awaiting further data on inflation and the unveiling of the Union Budget scheduled for later this month.
“The Reserve Bank will adjust the forecast path as and when more clarity emerges on the timing of the implementation,” said the statement.