Lessons from NPA saga–सविस्तर माहितीसाठी इकॉनॉमिक टाइम्स मधील बातमी वाचावी.

The NPA issue has wider implications than its resolution because there is an uncomfortable thought that the high growth rates that were achieved during the earlier part of this decade had compromised credit standards. That is how all bubbles form and erupt. Business cycles are a norm with their amplitude being shorter in this globalised world and phrases like the ‘great moderation’ —which typified the US growth story— no longer can be taken to be a given. There are lessons to be learnt.
First, when there are phases of high growth in credit, which is commensurate with GDP growth, there could be the germination of such problems. Till around FY11, annual growth in credit averaged above 20% for the quinquennium and the NPA ratio was in the region of 2.3-2.5%. This phase was also associated with higher GDP growth and stimulus through fiscal incentives and lower interest rates. Further, the investment rate had reached the level of 35% at a time when infra was in focus.

via Lessons from NPA saga

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