A Guru and a Tycoon Feel India’s Endless Bank Salvage Pain
As a battle shapes up around collapsed lender Dewan, central bank stress tests predict non-performing assets in the system could double.
Howard Marks wades into Indian lending’s long-running solvency crisis.
Photographer: Christopher Goodney/BloombergAfter years of trying, making India’s broken banks whole is still very much like pulling teeth. The twists and turns in the $12 billion bankruptcy of a housing finance company shows how challenging it may be for the country to nurse its post-pandemic financial system to health.
The state-dominated lending system’s aggregate balance sheet had a gaping hole even before Covid-19. Now things could turn uglier. The regulator’s latest stress test projects nonperforming assets to jump to 13.5% of loans and advances by September in its baseline scenario, and 14.8% in the worst-case situation, almost doubling from 7.5% a year earlier.