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India central bank warns of bad debt surge as pandemic relief ends

Nonperforming loans projected at 13.5%, with auto and steel industries hit hard

A worsening bad debt problem at Indian banks could choke off lending to businesses and individuals.   © Reuters

NEW DELHI -- Indian banks will see a spike in bad debt later this year as a key coronavirus relief measure expires, the central bank says, flagging a source of potential financial instability that could hamper lending to businesses and individuals.

Nonperforming debt will account for 13.5% of all outstanding bank loans in September, the Reserve Bank of India forecasts, up 6 percentage points from a year earlier.

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