The underlying issue of this is also that RBI doesn’t want to make lending conditions a bit more stringent.
Most western banks won’t lend without a collateral
In the financial crises of 2008, the collateral was house price which they assumed and also overinflated but you don’t see a lot of business loan failures
The svb bank failure was due to them not hedging their interest rate exposure and even then the regulators had been warning them apparently
The second issue that faces not only this sector but probably the entire business and probably other sectors is the means to solve debt issues on courts at a faster pace. Sure countries like US and U.K. have a backlog but they have atleast put in place systems to tackle that
The problems we face are more structural in nature. Most countries would benchmark and adopt best working practices. In fact after Brexit when U.K. was required to renegotiate trade deals, they realised that they didn’t have a team with experience to head this area. So the entire international trade negotiation was awarded to an Australian citizen.
In India people would come on the streets if other than cricket and sports, we would take an external consultant for a key government area
The decision from RBI is not an isolated case. Many times these decisions are taken unilaterally with absolutely zero consultation with companies or people they will affect.
Somehow the lessons taught in IIM although helps the corporate world, the benefits of that brainpower and experience have to find a way into government.
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