Rajan's bank headache to linger as ICICI and Axis spark debt angst

Mumbai

INVESTORS who anticipated that India's central bank governor Raghuram Rajan would bring order to a bad-debt-plagued banking system by now are being forced to ratchet back those expectations.

Results from ICICI Bank and Axis Bank two weeks ago and comments from their top managers fuelled concerns that dud loans will continue to pile up, even after pressure from a Reserve Bank of India (RBI) audit had made them accelerate recognition of nonperforming debt. Some analysts who predicted soured loans would peak in the March quarter are now saying it may take as much as another year before the cycle turns.