Correct assessment...Rajan changed the banking culture in a country which did not have full convertibility, no foreign ownership of banks, Govt ownership of 70% bank assets, with 30% bank deposits in govt securities. Nowhere in the west banks are so secure as in India
Rajan was watching massive leading by banks on telephone and to units without land and primary permits. In many cases lending was in the face of adverse trade/fiscal policies. Like in the case of steel industry which was rescued by trade policy change protecting steel industry
Indian banking culture was suitable to bank led economy. Japan too used to give time to industry to pay off the NPAs. Japan was misled into IBC mode in late 1990s & early 2000s & put in a trillion USD. But Japan realised in 2010 it was wrong. See nri.com/global/opinion…
The study analysed that bad loans disposal at the cost of a trillion dollar taxpayers
burden by the Japanese government & concluded that such bail out was not
needed and the government must have opted to work more gradually to reduce the bad
loans by giving time to the banks
burden by the Japanese government & concluded that such bail out was not
needed and the government must have opted to work more gradually to reduce the bad
loans by giving time to the banks
This is despite the fact asset bubble losses caused bad debts in Japan which is difficult for industry to recover from normal business. Indian NPAs are due to either capacity building or arising out of re-auctioning of scam, which could be recovered by giving time to businesses.
Cases of frauds can be detected by forensic audit & isolated & punished. But to treat genuine market or policy related failures with misfeasance is great diservice to Indian business. PSU banks have become the victim. The target is their forced privatisation which no govt can do
I don't know when the Indian economic thinkers, policy makers and finaicial media will think independently like Richard Coo & Maya Sasaki of Noumura Research Institute which is a leading think tank of Japan see nri.com
Basel liquidity rules which is also solvency rules in West where the regime is full convertibility, free foreign investment in banks, no govt ownership of banks & no more than 5% secure investments of deposits makes no sense in India which is the other way round.
Where is an independent thinker for India who will think for India and in the Indian situation like Richard Coo and Maya Sasaki. Where is an independent think tank in India like Noumura Research Institute in India?
The country will pay a heavy price for inappropriate policies hostile to Indian situation being imposed on India by Xerox copy logicians.
