Gokarn hails Centre's steps to tackle bad loans

The Executive Director of IMF, Subir Gokarn, has expressed confidence that the Centre’s initiatives like the Indradhanush scheme, combined with reforms in bank governance, would help bring structural reforms at a time when Indian banks are grappling with bad loans.

“The business cycle problem compounded the asset-liability problem. This, combined with other factors resulted into much weaker environment for the banks,” former RBI Deputy Governor said on Monday.  “Fixed timeframe to clean up books and bank consolidation initiatives, besides Indradhanush scheme, would help achieve structural reforms.”

He, however, expressed reservations about the possibility of recapitalising banks with troubled asset quality. “You can’t recapitalise the leaky banks. First, you have to clean up their books before you recapitalise it,” he added.