The Mahapatra Committee recommendations could erode a large portion of public sector banks' net worth
....No wonder, banks are rejecting RBI’s suggestion as providing for NPAs would not only reduce their profit but the provisioning would also hit their balance sheets. If the banks post losses they will have to transfer it to the net worth in the balance sheet which would then be eroded to the extent of these losses. In other words Tier-1 capital of the banks will get affected, thus impacting their ratings and their ability to borrow and lend......
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