Friday, January 29, 2021

Economic Survey points out the original sin that caused India's banking crisis

Severe under-capitalisation of Indian banks was the inevitable outcome of prolonged forbearance. This triggered a distortion in bank's potential incentives, eventually emboldening them to indulge in risky lending. Such twisted incentives made banks go wrong on calculations, and as an end result, the quality of investment in the economy suffered badly.

source https://economictimes.indiatimes.com/industry/banking/finance/banking/economic-survey-points-out-the-original-sin-that-caused-indias-banking-crisis/articleshow/80574246.cms

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