TY  - CHAP
AB  - Abstract In the economic literature, a crisis has been thematically defined around bank runs, failure of large financial corporations, and financial distress. Section 1 summarizes our learnings about international banking crisis, in terms of the origin and impact of such crises. This provides us an international benchmark before we delve deeper into India's banking distress, its size and trends. Section 2 focuses on the twin-balance-sheet crisis in India. On one side, corporate firms recklessly overleveraged, resulting in excess capacities and business diversification. On the other side, banks, both private and public, fell prey to excessive and procyclical credit lending and improper monitoring. Overall, too many projects were left too weakly monitored. Separately, we have focused on two subsections, first, how the financial institutions in India have overstretched their credit-disposal limit during market upturns. Second, we found absence of any theoretically grounded approaches to determine the capital-adequacy ratios (CARs) for the banks. In Section 3, we have identified the steps taken so far by the Banking regulator and the Government to resolve the crisis. Further, we critically examine the role of Korea Asset Management Corporation (KAMCO) towards a successful non-performing assets (NPAs) resolution in South Korea. Few key takeaways include, (1) establishing a public asset-management company (AMC) focused on maximization of recoveries and resolution of stressed assets, (2) well-defined governance structure for the AMC ensuring it works on market principles, shielded from political interferences, and (3) realistic asset valuation and transfer price that ensures limited downside risks for the public AMC.
VL  - 25
SN  - 978-1-78756-453-4, 978-1-78756-454-1/1571-0386
DO  - 10.1108/S1571-038620180000025007
UR  - https://doi.org/10.1108/S1571-038620180000025007
AU  - Bhadury Soumya
AU  - Pratap Bhanu
PY  - 2018
Y1  - 2018/01/01
TI  - India’s Bad Loan Conundrum: Recurrent Concern for Banking System Stability and the Way Forward
T2  - Banking and Finance Issues in Emerging Markets
T3  - International Symposia in Economic Theory and Econometrics
PB  - Emerald Publishing Limited
SP  - 123
EP  - 161
Y2  - 2024/04/24
ER  -