Rajan warns banks there will be no more ‘extend and pretend’ on NPLs

Raghuram Rajan

Banks in India need to take action to deal with the large numbers of non-performing loans (NPLs), Reserve Bank of India (RBI) governor Raghuram Rajan said today (August 24).

Banks have proven unwilling to face up to the true scale of NPLs, Rajan warned, which he attributed to the stigma attached, as well as the need to provision for losses. The RBI, he said, will no longer offer regulatory forbearance to prop up these troubled banks.

"Regulatory forbearance, where RBI makes it easy for banks to

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