Lenders 'can't be asleep', must suffer compensation cut for bad loans: CEA

Ever-greening and zombie loans lead to sub-optimal capital allocation, says Chief Economic Advisor.

Senior management of lenders and financial institutions must suffer a be cut in their compensation for crony lending and ever-greening of loans, said the government’s Chief Economic Advisor K V Subramanian on Tuesday.

“Financial sectors should ramp up on its corporate governance and each institution and lender should own up the responsibility. Infrastructure projects are of very long durations so incentives of senior management aligned in such a way that board can’t be asleep on a wheel especially on zombie lending.” he said during a webinar organized by business association FICCI on distressed debt in the infrastructure sector.

Subramanian said