Rid of non-performance anxiety

The new bankruptcy mechanisms based on global best practices have started functioning. Bankrupt firms are being put up for sale. With such transparency, banks will take needed haircuts and close individual non-performing assets (NPAs). This process, combined with infusion of capital, is expected to take care of the twin balance sheet problem, and enable the economy to enter a higher investment and growth trajectory. There is a serious problem with infrastructure-stressed assets and NPAs. Power is a large capital-intensive sector with an NPA problem. NPAs would impose unbearable costs on the banking system through normal bankruptcy and sale. About 50,000 MW of power plants are involved, with a total investment of around Rs 2 lakh crore.