ET analysis: Is evergreening of loans evergreen?

For years, ‘evergreening of loans’ – throwing new loans to help a stressed or delinquent borrower repay old loans – has worried the regulator. Since rules prohibit lenders from doing this blatantly, some of them, mostly non-banking companies, had figured out a different way some years ago. They cut special deals with foreign credit funds, which bet on comparatively lower-rated bonds, to set up local alternative investment funds (AIFs).

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