Asset manager Brookfield has put $1 billion into a joint venture with India’s biggest bank to recapitalise and provide financial support to distressed corporate clients, the Financial Times reported today. The State Bank of India (SBI) announced that Brookfield, which specializes in infrastructure and private equity, had not only committed 70 billion Rupees ($1 billion) to a fund that will invest in stressed assets but also plans to help manage the recapitalized businesses. The SBI announcement represents a new tack from a state-owned banking sector hamstrung by mounting bad debts.

From deodorant makers to steel mills, Indian banks are getting stuck owning assets they are finding hard to sell under a plan where they exchange soured loans for equity, Bloomberg News reported yesterday. India’s banks have converted or are seeking to convert loans to at least 22 companies, amounting to more than 1 trillion rupees ($14.9 billion), into majority stakes since June 2015, data compiled from exchange filings shows.

India begins its four-week monsoon session of parliament today, with prime minister Narendra Modi’s government hoping to move ahead with long-awaited tax reforms to turn the country into a genuine single market, the Financial Times reported today. The adoption of a goods and services tax, or GST — to replace a raft of different state and local taxes with a single unified value added tax system — is seen as potentially transformative for India’s economy.

Lenders to Essar Steel Ltd have started discussions to restructure the company’s debt after it failed to meet a June-end deadline to find a buyer, said two people aware of the development. The debt-laden company has been looking for a buyer since November. “There has been a lot of discussion and waiting in this case. Now, the consortium has decided that it is best to restructure the debt and move on. As such, Essar Steel is a non-performing account with a large number of banks in the consortium,” said a banker at a state-owned bank involved in the case, speaking on condition of anonymity.

India’s central bank has warned that bad loan ratios will continue to rise this year, raising pressure on the government to expand its planned recapitalisation of the banking sector, the Financial Times reported. India’s state-owned banks, which account for nearly three-quarters of banking assets, have been hit hard by a wave of defaults on loans made in recent years to sectors such as infrastructure and steel.

Rolta India Ltd bondholders are forming a group to negotiate a debt restructuring after the software services provider failed to make interest payments, according to a document seen by Reuters on Friday. Rolta, whose biggest customer is the Indian government, said late on Friday its management was working on "addressing the overall situation in a comprehensive manner", blaming the cash crunch on significant expenses on a defence project and delays in payment collections.

The Reserve Bank of India's (RBI) new restructuring tool unveiled on Monday will raise banks' moral hazard risk because the high debt of these over-leveraged companies means their market capitalisation does not match the haircuts banks are likely to take, the Economic Times reported. Under a new 'Scheme for Sustainable Structuring of Stressed Assets' (S4A), RBI allowed banks to take equity in debt laden firms permitting them to split total loans of struggling companies into sustainable and unsustainable based on the cash flows of the projects.

The Reserve Bank of India relaxed guidelines on Monday for lenders restructuring large stressed loans, in a move that could allow banks to more effectively manage bad loans, Reuters reported. Indian banks are grappling with about $120 billion in stressed loans, or 11.5 percent of the total, and RBI Governor Raghuram Rajan has set a deadline of March 2017 for them to clean up the bad loans on their balance sheets. The central bank said late on Monday that lenders would be allowed to carve up stressed loan accounts into two categories.

Indian Prime Minister Narendra Modi took on critics who accuse him of failing to pursue “big bang” liberalization measures to revamp his country’s economy, saying he has set a path for accelerated growth that India’s states now need to help navigate. In an interview in his residence compound Wednesday, on the eve of his second anniversary in office, Mr. Modi said he had opened up more of the economy to foreign investment and made changes to curb corruption, fill gaps in rural infrastructure and make it easier to do business. “I have actually undertaken the maximum reforms,” Mr. Modi said.

India’s Parliament has passed a bankruptcy law that promises to make it easier to wind up a failing business and recover debts in Asia’s third-largest economy, The Wall Street Journal The Short Answer blog reported. The country’s banks are currently struggling with bad loans after the crash in commodity prices and slowdown in infrastructure projects affected corporates’ balance sheets and their capacity to settle debt.