Banks should perform or be privatised

Abstract

The era of social banking is over; inefficient government banks should be sold off. The question is how to go about doing it. The Reserve Bank of India released the financial stability report recently emphasising that economies around the world were experiencing uneven growth, deflationary pressures, and geopolitical risks. In such a situation, no country is immune to policies being pursued in other countries, especially in the advanced economies. Though India is a bright spot in world in terms of growth, its banking sector, which mirrors stress in corporate sector, continues to be a cause of concern.

The risks to the Indian banking sector have increased recently on account of deterioration in asset quality and low profitability, while credit and deposit growth have slowed significantly. A risk profile of select industries as on end March 2016, showed that iron and steel, construction, power, telecommunication, and transport, having high leverage ratios, can exert pressure on the deteriorating asset quality of bank loans. Read more at: https://www.thehindubusinessline.com/opinion/banks-should-perform-or-be-privatised/article8820084.ece