(Bloomberg) — Indian banks saddled with the world’s worst bad debt pile pose a risk to the nation’s economic growth unless the government steps in to recapitalize some of them, according to three former central bank chiefs in a soon-to-be released book.
The problem though is that Prime Minister Narendra Modi has very little resources to help the banks after pledging money to fight the pandemic’s fallout, the ex-central bankers say in the book, “Pandemonium: The Great Indian Banking Tragedy”. The reason: falling revenues that are seen causing the fiscal deficit to blow out to double that budgeted.
“Yes, the bad loan problem is big and real,” Duvvuri Subbarao, governor at the Reserve Bank of India between 2008 and the autumn of 2013, said in the book by journalist Tamal Bandyopadhyay. “But, what is also big and real is the fiscal constraints of the government.”
India…