Raghuram Rajan says more flexibility in recasting bad loans possible

The government is considering giving banks more flexibility when restructuring distressed loans in a bid to help cash-strapped projects to get funding from lenders, Reserve Bank of India (RBI) Governor Raghuram Rajan said on Tuesday.

"The RBI is exploring ways to allow banks more flexibility in restructuring," Rajan said in a speech at the Institute of Rural Management on Tuesday in Gujarat.

"This is a risk we are prepared to take if it allows more projects to be set on the track to recovery."

Banks have seen a sharp rise in bad loans after India posted sub-5 per cent growth for two consecutive years and have been urging the central bank to provide them with relaxations on classifying bad loans.
 
(Reuters)