Forced insolvencies to help Punjab National Bank avoid huge haircuts

On its part, the government will infuse Rs 2.11 trillion into cash strapped banks to rescue them

Punjab National Bank, India’s second-largest state-run lender, will be able to avoid massive losses after the government forced delinquent borrowers to repay loans or face liquidation proceedings under a new law.

The interest and bids received so far for assets put up for sale by India’s new bankruptcy court indicates that the bank may not have to take “huge haircuts” and cases will be resolved quickly, Sunil Mehta, managing director of the state-run bank, said in an interview over the weekend. He did not give details.

The new insolvency law "will give a good message that if you do not meet your