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The Economic Survey 2020-21 has raised the issue of zombie lending. It has noted that apart from from re-capitalising banks, it is important to enhance the quality of their governance.
“Ever-greening of loans by banks as well as zombie lending is symptomatic of poor governance, suggesting that bank boards are ‘asleep at the wheel’ and auditors are not performing their required role as the first line of defence,” it said, adding that to avoid ever-greening and zombie lending following the current round of forbearance banks should have fully empowered, capable boards.
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