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NPAs not ‘scary’ : Raghuram Rajan

RBI governor Raghuram Rajan feels bad loans of Indian banks are a cause for concern, but they are not scary. In a newspaper interview, the RBI governor said, ‘the point is there are two or three silver linings in the cloud of distressed assets. The balance sheets of Indian banks as a whole show that the stressed loans amount to around 10% of all loans extended by the banks. There are concerns that this may reach 14% by the end of the current financial year. A majority of these stressed loans are in the infrastructure sector. Rajan sounded hopeful saying many delayed infrastructure projects were actually getting back on stream as the economy improved and the equity markets are performing well. He said he would not agree that the rising bad loans would lead to a liquidity crisis in the Indian banking system. He said there is no uncertainty on this issue as the government will do it. It has never let any bank it owns go under.

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