The politics of tackling NPAs

RBI is being asked to play a more active role in tackling the menace of willful defaulters

It is commonly acknowledged that India’s financial sector mess has given rise to two specific but inter-related challenges. There is the challenge arising out of the poor health of banks because of the huge burden of their non-performing assets (NPAs) or sticky loans. And then, there is an equally formidable challenge of tackling the growing indebtedness of a large number of companies, particularly in the infrastructure sector, that undermines their ability to repay their loans.

This is also described as the twin balance sheet problem of the Indian economy. The indebtedness of Indian companies has had an adverse impact on the