. 18. the increase in resorting to restructuring can be partially attributed to excessive leveraging by some borrowers during boom period. an analysis of the trends in leverage of the larger borrowers in the country during the first decade of this century certainly seems to suggest this. again, there are deficiencies in the manner in which project appraisal is conducted especially with regard to cash flow analysis and determination of the date of completion of projects. when commercial operations are delayed, a host of factors including the uncertainties surrounding the project are cited as the reason. but, when there are uncertainties, these have to be accounted for during the appraisal of the project and a proper cushion needs to be built to take care of these uncertainties. instead, the effort is to appraise a project keeping in view an aggressive repayment schedule resulting in a very short term focus of borrowers, banks and financial analysts who appraise the project. this short term focus, in many cases, is the reason for the need for successive restructuring. table 1 trends in restructuring bis central bankers ’ speeches 19. let us look at some of statistical trends in restructured advances in the last few years. from the data available with rbi ( table 1 ), it is observed that between march 2009 and march 2012, while total gross advances of the banking system grew at a compound annual growth rate of less than 20 per cent, restructured standard advances grew by over 40 per cent. resultantly, the proportion of restructured standard advances to gross total advances increased from 3. 45 per cent in march 2011 to 4. 68 per cent in march 2012. 20. a further analysis of data suggests distinct trends in restructured accounts in public sector banks and in private sector and foreign banks. restructured accounts have growth at a compound annual growth rate of 47. 86 per cent in public sector banks as against a growth rate of credit of 19. 57 per cent. the corresponding figures for private sector and foreign banks are 8. 12 per cent ( restructured advances ) and 19. 88 per cent ( credit growth ) and ( - ) 25. 48 per cent ( restructured advances ) and 10. 96 per cent ( credit growth ) respectively. further, as on march 2012, the ratio of restructured standard advances to total gross advances is highest for psbs at 5. 73 per cent, while the ratio is significantly lower for private and foreign banks at 1. 61 per cent and 0. 22 per cent, respectively

- correcting, and even while some institutions weaken, others come to the fore. india ’ s is a dynamic society, ever changing, ever rejuvenating. indeed, the possibilities for free enterprise in india today are probably better than ever before in its history. conditions for free enterprise to flourish have historically thought to be two : 1. level playing field with easy entry and exit, and 2. protection of property rights. let me first discuss these conditions, then i will add two more that i think important for free enterprise to be politically viable. 3. broadening access to capabilities, and 4. a basic safety net. a ) level playing field with easy entry and exit. • competition leads to efficient outcomes when anyone can enter, set up a firm, and compete. the best entity wins leading to economy wide efficiency. • free enterprise and competition combats prejudice and social biases. o o dalit entrepreneurs direct benefit transfers bis central bankers ’ speeches • government and regulators are needed to set the rules of the game and enforce behavior. biased government / regulation distorts the playing field. not that there should be no handicaps but not unequal handicaps. o • work i did on entry regulation : italian firms small. but low entry. why? work i did rajan, laeven and klapper ( 2006 ). italian firms need greater size to overcome fixed costs of entry but grow more slowly. slower economic growth. in india o license - permit raj : remedy : liberalization of the 1990s. • o resources raj : privileged access to mines, spectrum, etc. remedy : auctions and transparency. o inspector raj : remedy : start up india, reducing red tape, entry barriers. continuing clean - up of laws gives hope, especially as states compete for simplifying regulations. rbi master directions. some continuing infirmities that especially hurt new firms : o infrastructure plus logistics : weighted against the small. o o roads, ports, airports, power, internet marketplaces land : weighted against the new. entry of 23 new banks competition between states finance : weighted against new and untried. changing with technology and new institutions. small firms and small banks – evidence : small finance banks unique id : government treds start - ups – liberalizing bis central bankers ’ speeches • still uneven playing field on distress. o o o resolving large firms very difficult : workers as pawns. courts focus on revival rather than resolution promoter benefited hard for debt to recover money