India’s bailout plan won’t help its really bad banks—and that’s a good thing

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India is unlikely to throw good money at the worst of its bad banks.

“Government officials have indicated that capital injections are to be targeted at supporting lending growth, which suggests the healthiest state banks—generally the larger ones—will be the main recipients,” credit rating agency Fitch said in a report released on Jan. 10. Lenders on the Reserve Bank of India’s (RBI) watchlist for rising non-performing assets (NPAs) are likely to be handed only modest sums, added Fitch.

Even though this may leave certain weak lenders bitter, it will only ensure that they don’t excessively rely on bailouts and, instead, focus on cleaning up their books. Moreover, the government’s message is clear: Recapitalisation is meant to prod banks into lending more to spur economic growth…

Read more : Quartz, 11.01.2018