File photo: The Reserve Bank of India. Photograph:( Zee News Network )
India's five biggest state-run banks are experiencing a bad loan of Rs 47,000 crore.
The audits revealed by the Reserve Bank of India for the year ended March 31, 2017 showed that the banks were experienced large losses.
Half of the countries 22 state-run banks are under the Reserve Bank of India's strict Prompt Corrective Action (PCA), therefore the hidden bad debt will have a catastrophic effect on the sector.
RBI's former deputy governor has said that a few of the banks undergoing PCA may find it hard to survive.
This increases reliance on loan recoveries from India's new bankruptcy process.
An analyst at a financial service said that Bank of India would now need a “favourable outcome” -- loan recoveries of about 50 per cent -- from the bankruptcy process.