Is the strong medicine the right strategy?
The sharp correction in the markets on Thursday was largely driven by the massive provision of Rs.20,600 crore made by SBI towards bad loans. It is not just about SBI. Every PSU bank has seen its profits slip or have moved into losses due to aggressive NPL write-offs. The RBI has already given banks a deadline of March 2017 to clean up their balance sheets. Massive write-offs in this quarter, therefore, were inevitable. The question is whether the strong medicine administered by the RBI on banks is actually justified? In fact, it is! Continue reading
