India's central bank deputy governor on Wednesday joined the debate over creating a so-called "bad bank" to handle record sour assets in the nation's banks, saying it could help if "designed properly". Banks in India had record stressed loans of $133 billion, or 12.34 percent of their total loans, as of last September, Reuters reported. About two dozen state-owned lenders, which own nearly 70 percent of India's banking assets, have an even higher stressed-loan ratio of 15.88 percent, according to data compiled by India's central bank. In its economic survey released on Jan.

Indian banks could unlock as much as 650 billion rupees ($9.6 billion) worth of security receipts they hold, as the South Asian nation proposes to allow listing of the instruments the lenders received for selling delinquent debt, Bloomberg News reported.

Vijay Mallya, the Indian liquor and aviation tycoon, was charged on Tuesday with conspiracy and fraud connected to a 9 billion rupee ($132 million) loan granted by a government-owned bank, a spokesman for India's Central Bureau of Investigation said, Reuters reported. The head of the Force India Formula One team and a former owner of an Indian Premier League cricket team, one-time billionaire Mallya moved to Britain last March after being pursued in courts by banks seeking to recover about $1.4 billion the Indian authorities claim is owed by his Kingfisher airline.

Edelweiss Asset Reconstruction Co. (ARC) Ltd is planning to file an insolvency case against Bharati Defence and Infrastructure Ltd in the National Company Law Tribunal (NCLT) to pre-empt winding-up petitions by unsecured creditors, said two people familiar with the matter, including a senior official at the ARC. Edelweiss’s move is in response to the dissolution of the Board for Industrial and Financial Restructuring, which makes Bharati vulnerable to winding-up petitions from unsecured lenders. “Under BIFR, a firm remains protected against any legal proceedings.

India lowered its borrowing plan for the year ending March 31 by 4.2%, in a sign that the government’s crackdown on tax evaders is helping to increase New Delhi’s coffers, The Wall Street Journal reported. The government says it plans to cut the amount it borrows by 180 billion rupees ($2.64 billion) from its earlier estimate of about 4.25 trillion rupees. Prime Minister Narendra Modi in November announced a plan to withdraw and replace 500- and 1,000-rupee notes in an effort to cut tax evasion, terrorism and government corruption.

Reeling under a huge debt burden of Rs 50,000 crore, the sugar industry today asked the government to restructure debt and extend interest subvention on soft loans for another three years, the Business Standard reported. A representation in this regard has been made to the PMO as well as Finance Minister Arun Jaitley recently by both private and cooperative sugar mills bodies -- Indian Sugar Mills Association (ISMA) and National Federation of Cooperative Sugar Factories.

Demonetisation has gripped India’s collective mind; and its banks’ attention of late, livemint.com reported in a commentary. Nevertheless, in the year past, much has transpired on the insolvency reform front, including a new Insolvency Code and asset reconstruction licences, and the Bankruptcy Board’s arrival with a bang. The orientation towards action is positive, and speaks of a refusal to permit the “perfect to be the enemy of the good”.

Early last month, Prime Minister Narendra Modi summoned his cabinet to a room in India’s capital, told them to leave their cellphones outside and delivered a shocker: He was about to go on national television to declare that almost 90% of the country’s paper money would no longer be legal tender, The Wall Street Journal reported. The move, prepared in secret by Mr. Modi and his advisers, kicked off a radical experiment in government control and instantly put India at the forefront of a nascent global campaign against cash.

The Reserve Bank of India unexpectedly left its main interest rate unchanged on Wednesday, citing global financial markets volatility, while it cut its growth forecast, in the first official assessment of a government decision to scrap most of the cash in circulation. The central bank’s monetary policy committee, headed by Gov. Urjit Patel, left the main interest rate unchanged at 6.25%. Four of five economists interviewed by The Wall Street Journal last week said they expected the RBI to cut its main rate by at least 0.25 percentage point.

A new strain of trickle-down economics has been spawned by the decision, on November 8th, to withdraw the bulk of India’s banknotes by the end of this year, The Economist reported. As holders of now-useless 500-and 1,000-rupee ($15) notes rushed to deposit them or part-exchange them for new notes, an e-commerce site offered helpers, at 90 rupees an hour, to queue outside banks in order to save the well-off the bother. Elsewhere, a chronic shortage of banknotes in a cash-dominated economy has left most trades depressed.