Ila Patnaik, Columnist

India Shortchanges Its Banks

Politics and fear-mongering have doomed a key reform.

July 22, 2018 at 11:30 PM UTC

Ila Patnaik is an economist and professor at the National Institute of Public Finance and Policy in New Delhi. She previously served as principal economic adviser to the government of India.

The government's sending taxpayer money down the drain.
Photographer: Anindito Mukherjee/Bloomberg

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India needs a strategy to get the government out of banking. Non-performing loans among state-owned banks — a legacy of India’s socialist past which account for nearly 70 percent of deposits — have crossed 5 percent of GDP. The central bank has restricted lending at 11 of them and forced one, IDBI Bank Ltd., to sell itself to the government-owned Life Insurance Corporation of India.

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