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Indian Banking
This paper overviews the issues of non-performing assets held by banks; slowdown in credit growth; corporate debt; absence of modern risk-based approaches to management and regulation; the poor record of banks in transmitting monetary policy impulses; and their contributions to financial inclusion. It attempts to show that reality is more nuanced than the standard perspective that blames public ownership or a failure to modernise for the stresses public sector banks face.
This is a revised version of an invited keynote paper on banking at the 2016 meeting of the Indian Economic Association. I thank the participants for their comments, questions and enthusiastic responses; and Reshma Aguiar for excellent assistance.
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