Indian Banking: Challenges in 2020
Indian banks ready for 2020
December 30, 2019
Indian banks ready for 2020*
This refers to the article "Indian banking: Challenges in the new decade" (Business Standard, December 30). The excellent analysis, supported by facts and figures, gives enough food for thought for policy makers, on what awaits the Indian banking system during the third decade of the current century.
The numbers for 1999, 2009 and now recalled, in a way gives an impression that retrieving the health of the system and restoring public trust in institutions, though an uphill task, is, even at this stage, is a bright possibility.
It needed a Raghuram Rajan, to come all the way from Chicago to tell us several basic things about the inadequacies in the financial sector. From the diversions the Financial Sector Legislative Reforms Commission took from its mandate to the urgency in banking reforms and from the urgency in handling stressed assets of banks to the need for fiscal policy support for chasing inflation target.
The concluding paragraph of the article sums up the challenges before policy makers clearly. There's no escape from improving governance in PSBs. Post-consolidation, the big PSBs will have to be given level playing field with the biggest private sector banks and freedom to professionalize HR and decision making within the contours of statutory provisions. Such a move will prevent accretion of new bad loans.
Public trust in the banking system will have to be restored by ensuring that the smallest deposit in the smallest bank is safe. Though deposit insurance is a tool, the message about the safety of deposits with banks has to come from GOI and RBI.
M G Warrier, Mumbai
*Submitted version. Not published