There seems to be no end to the bad loan problem for India’s finance industry.
Banks and non-banking financial companies in India have been accounting for non-performing assets – loans where repayment instalment has not been made for over 90 days since the due date – for several years now, mainly because some large business tycoons either defaulted or defrauded the system. But now, the problem is becoming more widespread as regular Indians are struggling to repay loans due to the Covid-induced slowdown in small and medium businesses, and job losses.
In April-June this year, many borrowers could not repay banks because the deadly second-wave of Covid-19 dented businesses and jobs further and increased the healthcare costs of families. As a result, many financial institutions were forced to set aside “provisions”, which ate into their quarterly profits.
“This time, the bad loan crisis had widened,” said Asutosh Mishra, head of research for institutional equity…