Bank's health worries

Letters: A sinking ship: The challenge before the banking sector, in particular public sector banks, is the recovery of bad debts called non-performing assets

February 26, 2016
Banks’ health worries
This refers to Sudhir Keshav Bhave’s letter “A sinking ship” (Business Standard, February 26). This could be an example of how transparency in a sensitive business like banking can spread panic. The Indian banking sector is not in as bad a shape as is being made out by some analysts and external agencies. Major Indian commercial banks including SBI have been able to meet all statutory requirements. Unlike their corporate co-travellers, banks are meeting their payment obligations on due dates and in the recent past there have been no bank failures in the commercial banking sector in India. Part of credit for this should go to the vigilant regulator. This is not to argue that all is well as regards functioning of commercial banks.
There is immediate need to restore the health of the banking system impaired mainly by reluctance of big borrowers to make timely repayment and heavy burden on public sector banks (PSBs) arising from workload and drain on resources in performance of social responsibilities.
There is no point in arguing now that the overhaul and professionalization of public sector banks (PSBs) should have happened along with bank nationalisation and there should have been regular ‘health checks’ and ongoing corrections. Just as a ‘health check-up’ does not change the condition of a person, the re-classification of more loans
as NPAs does not alter a bank’s ability to change. The need of the hour is to support banks to recover their dues from borrowers who have the capacity to repay, infuse professionalism in the banks’ working and restore the faith in the banking system.
As private sector banks have failed to perform their responsibilities and are not too willing to grow (their share in banking business is less than 30 per cent), privatising the
existing public sector banks is no solution. Perhaps, GOI should consider nationalising entire banking business and restructuring the banking system to serve public interest.

M G Warrier


Popular posts from this blog


The King of Ragas: Sankarabharanam