Indian Lenders Seek Easier Bad Loan Rules From Regulator

(Bloomberg) -- India’s state-run banks sought an easing of rules related to bad loan recognition in a meeting with newly-appointed central bank Governor Shaktikanta Das, people familiar with the matter said..The heads of seven banks also asked for a liquidity boost for the financial system to help non-bank financiers tide over a cash crunch, the people said, asking not to be identified as the discussions are private. An easing of lending curbs on 11 weak state-run lenders was also discussed, they said. .Key Insights.Regulations have limited banks’ ability to extend credit. The bank chiefs may see an opening for rules to be softened after previous Governor Urjit Patel’s surprise resignation this week following a rift with the government. Bankers are hoping Das will be more lenient in implementing regulations on bad-loan recognition and its prompt corrective action framework, helping them boost lending and reducing their need to provision for soured loans. A liquidity boost to the financial system and funding lines to non-bank lenders would calm credit markets that have been rattled after shock defaults by Infrastructure Leasing & Financial Services Ltd. .Get More.Power companies have approached the courts to seek relief from the RBI’s February circular, which tightened norms on debt servicing. Das said Wednesday that he also plans to meet with the CEOs of private sector banks to understand their concerns. An RBI spokesman didn’t immediately respond to a phone call seeking comments..--With assistance from Anirban Nag..To contact the reporter on this story: Saloni Shukla in Mumbai at sshukla72@bloomberg.net.To contact the editors responsible for this story: Arijit Ghosh at aghosh@bloomberg.net, Anto Antony.©2018 Bloomberg L.P.

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Indian Lenders Seek Easier Bad Loan Rules From Regulator

Bloomberg Quint