‘Bank recap should be part of broader reform package’

‘Bank recap should be part of broader reform package’

Context

The IMF has said that the recapitalisation of India’s public sector banks should be part of a broader package of financial reforms to speed up the resolution of their massive non-performing assets, which has attracted attention in the backdrop of the Nirav Modi case

Situation of NPAs

According to a recent Assocham-Crisil study, India’s banking sector will be saddled with gross non-performing assets (GNPAs) worth a staggering Rs. 9.5 lakh crore by March-end, up from Rs. 8 lakh crore a year-earlier

IMFs thoughts

Mr Zhang said that “IMF thinks that the PSB recapitalisation should be part of a broader package of financial reforms to speed up the resolution of NPAs, improve PSB governance, reduce the role of the public sector in the financial system, and enhance bank lending capacity and practices”

Backdrop

International Monetary Fund Deputy Managing Director Tao Zhang’s visit to India