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'Zombie' power plants: A financial time-bomb that may torpedo Indian banks

The most intractable bad loans, the ones the bad bank is meant to deal with, are concentrated in one sector: power

Power Plants
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Power Plants

Mihir Sharma | Bloomberg
Government seems intent on abandoning good ideas for dealing with the country's banking crisis and encouraging bad ones. Perhaps that shouldn't be surprising, given that the bureaucrats don't yet seem to have grappled with the real nature of the problem.

The latest terrible proposal for dealing with the bad loans weighing down India's state-owned banks, which control more than two-thirds of deposits, is to create a "bad bank" -- an asset-management company that would take stressed assets off their balance sheets. Naturally, the scheme emerged from a committee made up of the heads of India's nationalized banks.

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