The Big Bank Scam?
For over 5 years, economists and analysts have issued numerous warnings on the plaguing bad loans problem in the Indian Banking sector. Although the bad loan problem cropped up as early as 2011, the first bold measure against this banking ill was undertook by former RBI governor Dr.Raghuram Rajan in December 2015. Since then the fight against the bad loans has only become stronger. Bank Jargon NPA : Non Performing Assets - Loans given out by banks for which interest/principal is not paid by the borrower (loan default) Provisioning : Setting aside money to cover for losses arising from loan defaults - typically this money comes from the bank's profit (SARFAESI) Act - a recovery method that gives the bank the right to recover its dues by seizing the borrower's assets. Asset Reconstruction Companies - a recovery method that allows banks to sell the defaulted loans at a discount to an ARC company, which then tries to recover as much as possible from the borrower. The loan