- Suggests setting up public sector asset rehabilitation agency (PSARA) to take charge of large bad loans in banks.
- With government backing, PSAR can overcome coordination and political issues on bad loans
- As per the Survey, gross NPAs has climbed to almost 12 per cent of gross advances for public sector banks at end-September 2016.
- At this level, India’s NPA ratio is higher than any other major emerging market, with the exception of Russia.
- The consequent squeeze of banks has led them to slow credit growth to crucial sectors-especially to industry and medium and small scale enterprises (MSMEs)-to levels unseen over the past two decades.
- As this has occurred, growth in private and overall investment has turned negative. A decisive resolution is urgently needed.