The government delayed the recapitalisation plan as the aim was to first establish a new culture and get rid of the “old practice of evergreening”, said Sanjeev Sanyal, principal economic adviser to the Government of India.
The bank recapitalisation plan was brought in after the government was confident that this new culture had set in, in terms of recognition of bad loans and resolving stressed accounts by using the new bankruptcy process, he told BloombergQuint in an interview.
As the growth happens and these banks start becoming profitable, they will organically generate profits and be able to grow on their own. So we just needed to create enough space for them to get going.Sanjeev Sanyal, India’s Principal Economic Adviser to the Government of India
Watch the full interview here.