Nonperforming assets weigh down any bank but are particularly burdensome for those in emerging market economies. South Korea, in response to the Asian Financial Crisis of 1997, took steps that provide a blueprint for banks facing different circumstances but similar challenges today.
COVID-19 has strained every part of India’s society, including its financial sector. Small businesses are suffering, but banks (many owned by the government) are hesitant to lend. For India to get back on the road to recovery, institutional finance is crucial. Policy steps in the right direction are being made, but more needs to be done.