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‘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