While the banks needed to guard against growing credit concentration risks especially in sectors which had witnessed excessively high growth, the corporates should have had the foresight of analyzing the emerging market dynamics. There was a general reluctance from the banking community to admit the level of stress in their books.
It was built on the premise that NPAs are taboo and no one would be willing to lend to such accounts. Though, this perception has some real life truth, my question is should we not administer drug to the sick? Sometimes, there are overblown fears of unknown. If we don’t address the stressed accounts, what are our alternatives?