Public sector banks - Loans turning bad

.....Until 2001, these restructured accounts were considered NPAs, but to provide reprieve to banks and borrowers, the Reserve Bank of India (RBI) magnanimously took a decision to permit these loans to be treated as standard so long as they were rescheduled before becoming NPAs. Banks were allowed to do this if they considered the projects to be viable and believed that the cash flow problems faced by these borrowers were temporary. This amounted to the regulator’s nod to ‘ever-greening’ of loans and officially postpone the problem. More often than not, a sizeable chunk of these loans becomes non-performing—RBI officials themselves concede that 15% of restructured assets become bad debts........

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