Rising NPAs, credit slowdown! Why bankers need to think like trustees to revive banking sector

what-is-basic-savings-bank-deposit-account-bsbda-benefits-and-conditions-full-detail Considering Indian banking continues to function way below its potential, several big changes need to be brought into the banking sector. Image: PTI

Considering Indian banking continues to function way below its potential, several big changes need to be brought into the banking sector. However, what needs to be immediately done is to ensure bankers start thinking like trustees. More policy teamwork and bankers thinking like trustees will make India’s infrastructure robust by giving every deserving individual or enterprise access to credit. Not only will this make the Indian banking system bigger and safer, India’s poverty will also find the museum it belongs to, writes Manish Sabharwal of Teamlease Services in The Indian Express.

Even though various policy reforms were observed in the last many decades including bank nationalisation, silly bad loan accounting, poor bank governance, and regulatory forbearance began a slippery slope that enabled a reckless expansion of credit from Rs 18 lakh crore in 2008 to 54 lakh crore in 2014, he said.

However, considering certain reforms by the government and RBI such as IBC and PCA, have restored confidence in banking to an extent. “Actions over the last few months signal that individual accountability for bank managements is being restored,” he wrote.

“We need a stronger voice of capital and skin in the game for shareholders (in government banks the management is often powerless; in private banks the shareholders are too fragmented to be powerful). The Bank Board Bureau must become an independent government bank-holding company focusing on strategy, culture, governance,accountability and growth. We need more accountability for board chairs, independent directors, auditors, etc. We need thoughtful and long-term solutions to balance central bank independence and accountability,” he also said.

Thinking like trustees will, to a large extent, solve India’s banking problems and ensure putting India’s poverty in the museum it belongs to, he said.

Source: Financial Express