Public Sectors Bank (PSBs) can’t lend as long as they have huge Non Performing Assets (NPAs). According to the latest financial stability report by RBI, stressed assets have risen from 10.7% to 11.1% in March 2015 from Sept 2014. The process of dealing with loans is very slow which leads to inefficiency. In order to de stress these assets, either provide extra capital to PSBs or get rid of NPAs from the balance sheet. The former is difficult since the scale of capital needed for the purpose is huge, which the current fiscal situation would not permit, latter being the only resort available. Cleaning up NPAs would also give the much needed capital for lending. Read more at: http://blogs.economictimes.indiatimes.com/Myth-n-Reality/unburden-banks-of-non-performing-assets-for-faster-economic-recovery/