ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Radheshyam VermaSubscribe to Radheshyam Verma

Determinants of Recovery of Stressed Assets in India

There have been signs of stress in the balance sheets of banks in an environment of increasing uncertainties and a fragile global economy. Weakening loan recovery rates not only forces banks to face the burden of higher provisions and limits their lending capacity, it also diminishes their profitability and solvency. Examining the determinants of recovery of defaulted loans by banks in India, the need for a stronger and effective insolvency regime is felt so as to improve the debtor-creditor relationship and credit environment. The importance of the presence of collateral, the type of collateral used, and a conducive macroeconomic environment towards recovery of bad loans are highlighted. There is a need for strengthening banks' credit appraisal system. Access to alternative resources facilitates loan recovery, highlighting the need for further development of capital market as a source for adequate resources for borrowers.

State of Fabric Producing Units in India

The estimates in the government-funded surveys of the handloom and powerloom sectors of the number of units, looms and employment are not reliable since they are especially designed to identify units eligible for sector-specific schemes. The unit-wise Annual Survey of Industries and the National Sample Survey Organisation 62nd round data for 2005-06 cover the entire manufacturing data, but the results derived for variables such as value added, output, fabric production, etc, are also not considered reliable as the small units have a tendency to under-report their production in order to retain the benefits of small-scale sector tax incentives. This paper presents an analysis of the National Council of Applied Economic Research sample survey, which was designed to estimate the weighted per unit ratios for various size classes of units belonging to the handloom, powerloom/mill and knitting sectors.
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