Comment on Bootstrapping vs Funding - a tax arbitrage

Parag Saraiya commented on 30 May 2021, 11:56 AM

Nithin

Traditionally Indian banks (PSU) while assessing proposals for loans to companies, used to evaluate tax paid (hence insistence on ITR of last many years) and hence many businesses were advised by their consultants to show certain level of profit and pay income taxes so that they remain eligible to get loans From SBI or Canara Bank etc. Same goes for individuals. Banks typically have limited way of assessing growth of companies, RATHER they shy away from using that metric to derisk their lending. hence they lent to historically successful companies(profits, assets) and saw their money disappear in many cases.

Parag Saraiya

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