Coming clean on NPAs

......There is little to be gained from making fine distinctions between NPAs and ‘restructured loans’ that merely obfuscate the underlying problem of bad debts. The panel under the RBI Executive Director, Mr B. Mahapatra, has correctly observed that restructuring of a bank account amounts to an “event of impairment”, whether or not its asset classification undergoes a downgrade. Since international accounting standards and regulations followed in advanced economies treat any restructured bank account as impaired, there is no reason for India not aligning its prudential guidelines with the global best practices.........

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