Good banks and a bad bank

The infrastructure sector continues to reel under the 'twin balance sheet' issue

India’s bad loan problem continues to keep policymakers awake at night. The most comprehensive overview of it, as well as a proposed solution, has been presented in the recent Economic Survey, which addressed a whole chapter to this “twin balance sheet” issue — the dual problem of tottering corporate balance sheets weakened by heavy bad debts and bank balance sheets awash in red ink.
 
There is no doubt that the problem is one of the most serious ever faced by India’s financial sector. The estimate of non-performing loans is now around $191 billion, or well over eight per cent