Banking Distress: Causes and Remedies

The past three years have witnessed rapidly increasing stress on the Indian banking sector, with non-performing assets (NPAs) steadily climbing from under 3% to over 11% of total assets. Loan-loss provisioning for these NPAs has seriously eroded the capital base of a number of banks, thereby limiting their ability to make further loans. There is now a general consensus that the state of Indian banking is one of the biggest challenges facing the country in accelerating investments and growth. Pronab Sen in his article argues that much of the problems currently being faced by the banking sector arise from a fundamental change that occurred in the Indian banking sector after 2002.

Continue Reading Banking Distress: Causes and Remedies