Abstract
Banking industry in India is struggling hard to address the problem of Non performing Assets (NPA) . The problem is much more severe among Public Sector Banks and it has reached almost 9 percent of the total advances in 2015-16. Reduced interest income and provisioning requirements erode away profitability and lending capacity. The recent announcement by the Government of India to issue recapitalization bonds worth Rs 1.35 lakhs crore can give stimulus to the banking sector without incurring much fiscal burden. The capital base of the banks will be strengthened and the banks can earn dividends on shares. However banks and the government must be more responsible and take extra care while exploiting the new opportunities. The losses are needed to be recognized and reported properly.
Keywords: Bail In, Bail Out, Non Performing Assets, Public Sector Banks, Recapitalization.
References
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