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To say that big businesses are failingbecause of opening up of the
economy is only partially true. Probably more relevant is the truth that
We have lived for half a century under
a protected environment WITHOUT LEARNING
TO BE COMPETITIVE. Still of more import is the fact that we as nation have learned to prosper mainly through venality and sycophancy.
NPA are also caused by the sluggish legal system. There are countries where NPA problem is not so severe because of thriving legal system.
Finally, it is not obligatory on the part of the government to fund bank losses. Narsinhman Committee has clearly stated that banks should not be allocated public money. The present awareness, debate and regulations on capital adequacy has its basis in the thought on how to fund the bank losses. As in all businesses, banks should also fund their losses out of their Capital (and Reserves). Thus, NPA causing loss of public money is not necessarily true. Governments fund banks losses only to the extent that survival of the banks is necessary for survival of the economy and even these funding is being sought to fade.
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