RBI nudges banks over dubious accounts

Banks are in a major dilemma over a directive from the RBI that lenders should decide whether loan accounts that have been ‘red-flagged’ as suspicious over six months ago are fraudulent or not. If banks do not classify these loans as a fraud, they risk being pulled up for being lenient. If they do, they must set aside provisions for 100% of the loan amount within a year.

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