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Problems for India's public-sector banks?

Written by Ashwin Rattan Monday, 20 August 2012 21:52
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From The Economist

 

ONE of India’s strengths is its companies. In general they are profitable, well-run and have healthy balance-sheets.

 

But the country has long had pockets of indebtedness, too. A tradition of “promoters”—as individuals or families with controlling stakes are known—can lead firms to borrow rather than dilute down their masters’ stakes by issuing shares.

 

A rabble of public-sector walking dead, from Air India to local electricity boards, bleed cash yet still get access to state-owned banks. And a boom in infrastructure projects, from roads to power stations and airports, is being paid for with debt.

 

Some of these projects are now in trouble because of red tape and a slowing economy.

 

To read the full article, click here.

 

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