How to save Indian banks

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How to save Indian banks
Unfortunately, the Financial Sector Legislative Reforms Commission (FSLRC) — for reasons of motivated mandate and functional constraints due to wrong guidance from finance ministry, instead of dealing with ‘financial sector reforms’ — went on a tangent and produced a report aimed at breaking the regulatory apparatus in the financial sector and disturbing the public debt management arrangement, which was in working condition.
Of course, the damage was minimised by the presence of Raghuram Rajan during 2013-16.
The institutional structure, management and the entire working of the four sub-sectors in the Indian Financial System, namely public sector banks, private sector banks, non-banking financial companies and cooperatives are overdue for a revamp and overhaul. After the nationalisation of banks, we have been trying measures in isolation whenever problems surfaced. Reasons for such a sporadic approach varied from political to ‘fear’ of consequences.
Governance issues such as inadequacies in credit appraisal and risk management, dual regulation, political and bureaucratic (read finance ministry) interference and adequacy of compensation to recruit and retain talent and professionalisation of boards with sufficiently long tenure of membership flagged in the editorial need immediate attention at the highest level. Quickly attending to these issues may save the Indian financial system.
MG Warrier
Mumbai

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