Just creating a bad bank solves nothing
The Reserve Bank of India (RBI) is dusting out a plan to create a ‘bad bank’. This will absorb toxic loans from the country’s banking system, cleaning up other banks’ books. Later, the bad bank can sell off these ‘assets’ at discount to willing buyers. The bad bank may be necessary, but not sufficient to wriggle out (बच निकलना) of our systemic financial problem. Around 90 per cent of Indian banks’ non-performing assets are with state-owned banks. The latter dominate the country’s banking system, but are hobbled (लड़खड़ाना) by inefficiency, graft (घूस) political interference and state control. The government has sought to address this with a Banking Bureau, but is unwilling to let go of majority ownership and control, the root problem.
The last cuts both ways: in good times, bosses of state-owned banks could vault prudential norms to lend to political favourites. But over the last decade or so, as rumours of crony capitalism mounted with bad debt, bank bosses have turned risk averse(खिलाफ, प्रतिकूल) freezing lending rather than risk prosecution(अभियोग) . Lending is dormant, investments have stalled. We need systemic overhaul, not a onetime dusting of bank books.
First, India has to develop a bond market that can service long-term debt of 15 years or more; this will resolve the asset liability mismatch, where banks can lend for, say, five years for returns that take much longer to come. Second, the enactment (अधिनियम) of new bankruptcy law makes it easier for the lender to liquidate or transfer the business or convert debt to liquid equity. As glitches (अचानक होने वाली खराबी) get ironed out, this might help clear some dud (व्यर्थ, बेकार) loans. Finally, the government has to cede (त्यागना, हवाले करना) some control over state-owned banks and let them function according to market principles, without fear or favour to vested (निहित) interests. Bad banks can only bandage a life-threatening injury.
Wriggle out
To avoid doing something that you do not want to do. बच निकलना
Synonyms: Evade, Escape, Dodge
Example: Lawyers are negotiating just how the 33-year-old can wriggle out of the five- year contract he signed with the company in 2007.
Hobbled (v):
Walk in an awkward way लड़खड़ाना
Synonyms: Stagger, Falter, Dodder
Example: Dinesh appeared thoughtful before he pushed himself to his feet and hobbled to the couch.
Graft (n,v)
To try to make someone do something for you by giving them money घूस
Synonyms: Ingestion, Bribe
Example: A famous movie star left away her husband, a graft-taking politician.
Averse (ad)
Having a strong dislike of or opposition to something. खिलाफ, प्रतिकूल
Synonyms: Reluctant, Unfriendly, Loath
Example: My teenager daughter is averse to chores and usually has to be forced to complete her cleaning duties.
Prosecution (n)
Conducting of legal proceedings against someone in respect of a criminal charge. अभियोग
Synonyms: Indictment, charge, imputation, Impeachment
Example: The key witness for the prosecution was offered police protection after she received death threats.
Enactment (n)
The process of passing legislation. अधिनियम
Synonyms: Act, Statute
Example: Apart from gardens and house-property, all land was, according to this enactment owned by the state.
Glitches (n)
A sudden, usually temporary malfunction or fault of equipment. अचानक होने वाली खराबी
Synonyms: Bug, Malfunction, Flaw
Example: The system has been plagued with glitches ever since its launch.
Dud (n, ad)
Not working or meeting standards. व्यर्थ, बेकार
Synonyms: Vain, Useless, Pointless
Example: He's made eleven movies in the last 20 years and not one has been a dud.
Cede (v)
To allow someone else to have or own something, त्यागना, हवाले करना
Synonyms: Give, Up, Handover, allow
Example: Hong Kong was ceded to Britain after the Opium War.
Vested (v)
Confer or bestow (power, authority, property, etc.) on someone. निहित
Synonyms: Inherent, Implicit
Example: The judicial power is vested in a high court and many subordinate courts.
Dump 2020 cap on aviation emissions
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