.............If RBI is technically sound, Indian banks will be forced to reduce the growth of their balance sheets, owing to inadequate equity capital. They will be forced to take in fewer deposits and give out fewer loans. This is going to exert a drag on economic growth. Some are enamoured by an easy solution: set up a National Asset Management Co (Namco) with government money , and transfer bad assets to Namco. Once the distressed assets are out of the way , banks will get back to happy days. But there is no free lunch..............
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