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

Rajeswari SenguptaSubscribe to Rajeswari Sengupta

Non-performing Assets in Indian Banks

Growing non-performing assets is a recurrent problem in the Indian banking sector. Over the past two decades, there have been two such episodes when the banking sector was severely impaired by balance sheet problems. A comparative analysis of two banking crisis episodes— one in the late 1990s, and another that started in the aftermath of the 2008 Global Financial Crisis and is yet to be resolved—is presented. Taking note of the macroeconomic and banking environment preceding these episodes, and the degree and nature of crises, policy responses undertaken are discussed. Policy lessons are explored with suggestions for measures to adapt to a future balance sheet-related crisis in the banking sector such that the impact on the real economy is minimal.

Corporate Insolvency Resolution in India

This paper analyses the corporate insolvency resolution procedures of India, the United Kingdom and Singapore within a common framework of well-specified principles. India, at present, lacks a single, comprehensive law that addresses all aspects of insolvency of a firm. It has multiple laws, regulations and adjudication fora, each of which have created opportunities for debtor firms to exploit the arbitrage between these to frustrate recovery efforts of creditors. This adversely affects the resolution process, the time to recovery and the value recovered. The importance of a comprehensive, well-functioning insolvency resolution framework has been documented in the literature. In India, the Bankruptcy Law Reforms Committee was constituted in 2014 with the objective of proposing a comprehensive framework for resolving the insolvency of firms and individuals. This paper undertakes a comparison of the corporate insolvency resolution framework in the UK, Singapore and India, with the underlying motivation to highlight the similarities and differences across the laws, procedures and institutional context of the three countries.

Capital Account Management in India

India has been subject to capricious capital flows since its integration with the global capital markets in the early 1990s. In a bid to balance diverse objectives, India, like many other emerging markets, has resorted to active management of various types of capital flows. This paper finds that while the calibrated liberalisation approach resulted in altering the composition of capital flows towards more stable flows, and has helped India to negotiate the "Trilemma," the use of sporadic capital account management measures in the face of surge or stop of capital flows has not been very effective in achieving their objectives of reducing external vulnerability or mitigating macro-prudential risks.

Estimating a Monetary Policy Rule for India

This paper investigates whether the seemingly discretionary and flexible approach of the Reserve Bank of India can in practice be described by a Taylor-type rule. It estimates an exchange-rate-augmented Taylor rule for India over the period Quarter 1 of 1980 to Quarter 4 of 2008. It investigates monetary policy changes between the pre- and post-liberalisation periods in order to capture the potential impact of macroeconomic structural changes on the rbi's monetary policy conduct. Overall, it finds that the output gap seems to matter more to rbi than inflation, there is greater sensitivity to consumer price inflation, exchange rate changes do not constitute an important policy factor, and the post-1998 conduct of monetary policy seems to have changed in the direction of less inertia.
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