Just a day before Neil Armstrong and Edwin Aldrin took a ‘giant leap for mankind’ to leave the first human footprints on another world half a century ago, Indira Gandhi’s India embarked on an uncharted journey to reform its failure-prone banking system through state ownership. But even five decades later, the need for reforms is as urgent as on the eve of nationalisation. Indira Gandhi’s successor as India’s first full-time woman finance minister, Nirmala Sitharaman, meant as much in her maiden budget speech earlier this month. And problems dogging the state-run banking system – bad loans, frequent federal bailouts, and poor underwriting skills – have refused to go away even more than a century after John Maynard Keynes, the original proponent of a central bank in India, described the country as “so dangerous for banking.” India now holds the dubious distinction of having the worst nonperforming loan ratio among the world’s major economies. Not a single Indian bank features in the global list of systemically important banks. State Bank of India, the mainstay of local banking, ranks a lowly 55th on the list of the world’s largest financiers. North Block has infused Rs 2.5 lakh crore in the banks it… Read full this story
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