Choking the banks

The banking sector is going through stressful times — the total gross non-performing assets of all banks are estimated to touch Rs 1,50,000 crore by end-March 2012. This is nearly three times more than Rs 56,000 crore in 2008, when the collapse of Lehman Brothers triggered a financial crisis that India managed to weather without much damage. The RBI has also warned that much of the stressed assets are on account of lending to the infrastructure and priority sectors. Ironic it may seem, but these are the very sectors that will continue to require huge funds in the coming years. The government itself has said that the infrastructure sector will need $1 trillion over the next five years.

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