What’s stressing banks

.....While RBI may need to react to Moody’s somewhat sweeping condemnation of how banks are governed, Moody’s also points out that India’s loan classification rules were far more lenient than in other parts of the world; it pointed out that very often bad loans were being categorised as ‘restructured assets’ in the process allowing banks to get away with lower provisioning. RBI needs to work on this and some of it will probably be addressed in the new rules but simply framing rules may not be enough, there is also something about the lending culture that needs to change. RBI Deputy Governor KC Chakrabarty, for instance, has pointed out that much of the restructuring doesn’t seem transparent and, moreover, that there seems to be some element of discrimination. Neither of these is desirable but.......

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