Non-performing assets in Indian Banks: This time it is different

Rajeswari Sengupta and Harsh Vardhan ()
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Harsh Vardhan: Bain and Company

Indira Gandhi Institute of Development Research, Mumbai Working Papers from Indira Gandhi Institute of Development Research, Mumbai, India

Abstract: Growing non-performing assets is a recurrent problem in the Indian banking sector. Over the past two decades, there have been two such episodes when the banking sector was severely impaired by balance sheet problems. In this paper we do a comparative analysis of the two banking crisis episodes-the one in the late 1990s and one that started in the aftermath of the 2008 Global Financial Crisis and is yet to be resolved. We describe the macroeconomic and banking environment preceding the episodes, the degree and nature of the crises and also discuss the policy responses that have been undertaken. We conclude by drawing policy lessons from this discussion and suggest some measures that can be adopted to better deal with a future balance sheet related crisis in the banking sector such that the impact on the real economy is minimal.

Keywords: Non-performing assets; Public-sector banks; Capital adequacy; Bank recapitalisation; Balance-sheet crisis (search for similar items in EconPapers)
JEL-codes: E44 G21 G28 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2017-09
New Economics Papers: this item is included in nep-ban, nep-cta and nep-mac
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Citations: View citations in EconPapers (13)

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Working Paper: Non-Performing Assets in Indian Banks: This Time it is Different (2017)
Working Paper: Non-performing assets in Indian Banks: This time it is different (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ind:igiwpp:2017-019

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