India Banks to Go to Court Over Bad Loans of 12 Large Debtors
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Indian two thousand rupee banknotes are arranged for a photograph in Mumbai, India, on Sunday, Jan. 29, 2016. Reviving India's growth and boosting demand are essential as gross domestic product is likely to grow 7.1 percent in the year through March, the slowest pace in three years -- and this is before considering the impact of currency shortages in an economy where 98 percent of consumer payments are made in cash.
Photographer: DHIRAJ SINGH/Bloomberg via Getty ImagesIndia’s banks have been ordered to use the country’s courts to resolve bad loans totaling about 2 trillion rupees ($31 billion) issued to 12 large debtors.
The Reserve Bank of India told the banks to use insolvency laws to find a solution for the debtors, which account for a quarter of the country’s total bad loans, before moving on to resolve the other problem accounts within six months, according to a statement posted on the central bank’s website late Tuesday. Indian banks have among the world’s worst stressed-asset ratios with total soured loans of more than $180 billion.