With debt having a negative impact on investments, the IMF has urged India to strengthen bank’s ability to go after debtor. The investments have left a bad impact and so banking sector needs to improve its ability to support growth. A recently released report by World Economic Outlook on Tuesday says that the global monetary agency warns that the corporate debt and the related banking bad credit quality concern affect the investment in India.
However, there recapitalization plans for all major public bank sectors in 2017, this will help in replenish capital buffers and improve the banking sector ability. This will improve the governance of public sector and support the growth of banking sector. This entire process will help in recovering and governing the mechanism of bank debts. The recent Rs.11.5 crore bank scam related to Punjab National Bank became a huge scare in the Indian banking sector.
Keeping eye on the bad loans and nonperforming assets problem, the RBI said in December 2017 that there were 10.2 percent bad loans of all the banking assets until September 2017. And this projected the growth to 10.8 by March 2018. Bad loans issue has come in limelight because of the very recent high profile case in India. In recent months with the disclosure of fugitive jeweler Nirav Modi’s alleged $2 billion-scam involving the Punjab National Bank.
India’s high public debt and recent failure to achieve the budget’s deficit target call for continued fiscal consolidation into the medium term to further strengthen fiscal policy credibility said IMF. The International Monetary Fund reiterated that India was on its way to achieving growth rates of 7.4 percent for 2018 and 7.8 percent for 2019. And this will be the highest globally for major economies.
However, IMF praised India for implementing GST (Good & Service Tax) for improving India’s tax compliance. The implementation of GST will help to ease the trade barriers between states. And