India's next Central bank faces a tough task to see a revival in lending to businesses. Raghuram Rajan was completely infected by investors and that resulted in bad debt clogging India's financial system. A senior banker said, "The bad thing is that funding by banks has almost stopped.
There's too much negativity. The government may not want it to precipitate more. It would be hard for the new governor to push balance sheet reform much further." On other hand, Senior officials told Government has narrowed down to four its list of candidates to replace Rajan.
They have stunned markets as he would not be reappointed. Mr.Rajan is a former International Monetary Fund chief economist and he spoke about India's "crony capitalism", which has seen banks endlessly rolling over dud loans to companies.
Reserve Bank of India (RBI) has brought to light roughly $35 billion of new bad loans since September.Finance Minister Arun Jaitley said in a recent television interview with the Zee Media network that banks should strike a balance between expanding credit and cutting non-performing assets.
