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El documento ECONOMY Bank Recapitalization – A Welcome MoveBhargav Dhakappa avatar ByBhargav DhakappaPosted on November 21, 2017 Last month, the government announced its major initiative to help strengthen banks ridden with stressed assets and weak balance sheets. Recapitalization is key in this process. This process is expected to have a significant impact on the economy as it clears the blocks in the credit creation process. The origin of the current predicament is popularly called the ‘Twin Balance Sheet’ problem – something that the Chief Economic Advisor brought to limelight in the 2014-15 Economic Survey. The twin balance sheet problem refers to the impact of problems of stressed assets on over-indebted firms as well as banks. As firms are ridden with debt, they are unable to borrow to get out of the situation. This has an impact on the banks as they are unwilling to lend as assets become stressed. The net impact of the Twin Balance Sheet problem is the impact it has on credit creation – th ha sido eliminado.