How Banks Use Related Firms to Hide Bad Loans: New Evidence from India
Featuring Prasanna Tantri
How Indian banks use indirect 'evergreening'—routing loans through related firms—to mask bad debts, posing risks to financial stability.
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Prasanna Tantri
Associate Professor of Finance and the Executive Director at ISB’s Centre for Analytical Finance (CAF). His research focuses on banking, financial inclusion, financial contagion, regulation, and the intersection of politics and finance.
Key Takeaways
- Under-capitalised Indian banks may use sophisticated methods to hide troubled assets.
- Indirect evergreening has significant implications in emerging markets with weak external capital markets.
- As financial ecosystems continue to evolve, enhanced regulatory approaches are needed to ensure stability and transparency.