This is a hot topic and i have a solution to this problem without getting into the numbers, which needs research. So first, if a bank lends a loan to a firm, it should be categorized according to low risk, high risk and the prospects of its growth of different sectors. The idea is to put a percentage point, which i would call Risk- Profit Share Percentage Point(RPSP) or whatever is apt, based on that research. RPSP can be calculated every year, by a separate entity or a consortium of banks. So, if we put this RPSP as 2%(needs research) to say mining industry. If a mining company gets a loan from bank, it has to pay RPSP percentage along with the interest to the bank, only if it makes profit. If it makes loss, this RPSP percentage is exempted. If it goes for Insolvency code, also RPSP waived, bank even makes haircut. This RPSP will be high for a risky business. This RPSP will be purely based on Net Profit and how much the loan contributes to its whole asset. So, if a company makes profit, we get a little percentage to compensate for the loss if a company goes bankrupt.
