The Reserve Bank of India has told banks to be careful about the entities to which they sell assets acquired on account of loan defaults. According to news reports, the regulator has sent a note to the banks informally warning them about this. The warning could have been the result of the prospect of the promoters of companies acquired by banks after they failed to repay loans using shell entities to buy back these assets at much lower prices. If that is the case, it would also allow unaccounted-for or black money stashed by Indian businessmen overseas to come back into India.
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