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Indian banks might not meet bad debt clean up target in 2016.

Global Banking News-December 9, 2015--Indian banks might not meet bad debt clean up target in 2016

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Global Banking News - 09 December 2015

An ambitious programme to clean up Indian banks of their bad debts might not be achieved in its expected time frame in 2016 because banks can still hide bad debts.

A tool provided by India's central bank to help lenders tackle bad debts can be used to hide bad debts. Commercial banks in the nation are grappling with more than USD110bn of corporate stressed debt.

Last week, the Reserve Bank of India set a March 2017 goal, although it did not specify exactly what would have to be achieved by that date. The RBI also offered banks a strategic debt restructuring (SDR) provision, which is aimed at helping banks swap unpaid debt for majority control.

SDR allows debt in the process to be classed as 'standard,' without extra provisions or write-downs, for 18 months, which could lead to bunched up provisioning.

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Publication:Global Banking News (GBN)
Date:Dec 9, 2015
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