Indian Banking Let Down By ‘Maximum Government, Minimum Governance’
What has been happening to our banking system is not something we can forget easily; rather we have to carry it as a heavy baggage to the future, unless some promptness is set and act upon a blueprint on how to fix it.
A Problem of Staggering Scale Making up for losses incurred by public sector banks are enormous …
Among G-20 nations, Indian banking sector bad loans are presently among the highest. These losses are not due to Covid-19 but are mostly from legacy assets (say, bad underwriting post the global financial crisis). Amongst these losses, there are “bad, bad and ugly” contributors – seven banks have non-performing assets ratio between 15% and 28% …
Private sector banks have made up for the lack of credit growth in the public sector banking system. Their market-to-book ratios on average have risen sharply, a sign of lack of adequate capital in the public banking system, which creates fat intermediation margins for the private banks.
Chaos is not enough in itself … at times a stretch of three-fourth of a year, some public sector banks run even without a CEO/MD!
