Day of reckoning imminent for India's troubled lenders

Mumbai

THE day of reckoning is coming: The Reserve Bank of India is due to complete its audit of all 50 of the country's banks by the end of this month, forcing them to lay bare their hidden non-performing loans, stop making new loans to deadbeat borrowers just to pay the interest on their already-bad ones, and set aside more cash to cover their write-offs.

That means India's already-ugly bad loan situation is set to get even worse. The banks so far have been willing to disclose that US$131 billion, or about 14 per cent of their total lending, has gone bad since the RBI stepped up pressure on them last year.