Indian banking sector comes out as worse-off compared to other emerging economies in terms of how little bank capital it has set aside to provision for losses on its assets, i.e., on its non-performing loans, made primarily to the industrial sector.3 What does it mean to have little bank capital as provision for losses? I like the following analogy.
A bank not keeping adequate capital buffer to absorb losses on its loans that are more or less 4/7  BIS central bankers' speeches  known to be arriving soon is akin to not preparing to rescue with emergency a person who has slipped off the terrace of a skyscraper, and instead in the midst of his almost surely fatal descent, hoping that the laws of gravity would somehow freeze and work differently this time.