This serious thought by RBI Governor Raghuram Rajan is helping banks in recovering money

RBI Governor Raghuram Rajan has proved that he is not just any administrator but one who walks the talk.

After taking up the job, Rajan had announced that promoters cannot continue to run a business after spoiling it. And he meant it.

Banks have begun taking strict actions against the defaulters and are pursuing promoters like never before to get the transaction happening.

Banks like State Bank of India, ICICI, Axis Bank, Bank of Baroda, etc are reducing bad loans.

"We've been putting a lot of pressure on these borrowers and they are now finding buyers with valuations closer to their expectations," Arundhati Bhattacharya of SBI told ET, adding “cash recovery is improving because of a lot of follow-up and effort."

ET reported PNB recovered more than it did last year with total recovery and upgradations up at Rs 3,418 crore in the fiscal first half from Rs 2,365 crore a year earlier.

Likewise, Axis Bank recovered Rs 300 crore, ICICI recovered Rs 1,253 crore.

"Our options, when we look at a stressed loan, is either carry it as a zombie, pretend and lend or accept surgery. If we have a structural solution of capacity creation then the second is better otherwise we are down the path of first," Uday Kotak, vice-chairman of Kotak Mahindra Bank, told ET.