The Indian banking system has been infected with bad loans or NPAs as they are popularly known. It is not that our bankers are incompetent and dumb and get easily fooled by borrowers. Its a case of an integrity compromised banking system, due to collusion and corruption, where bogus loans have been willingly given. A large portion of the big ticket bad loans today involve loans by public sector banks (which control over 70% of the sector) to cronies patronised by the ruling political party. These politicians meddle in banks and compel them to lend to the cronies, the systems favourites, even if they are unworthy/ineligible for the loans given to them. The fact is that like in the case of any other borrower, even if the cronies are eligible for loans and their projects are viable, the bankers must not dilute their due diligence/appraisal and professional skepticism before agreeing to lend. But thats what is compromised, leading to bogus/fraudulent lending to cronies by the banks. In this episode of the Business tit-bits our Business Editor Mr Akhilesh Bhargava shares his take on the matter.
#Privatization #IndianBankingSystem #CronyCapitalism
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