resolution trust usa savings and loans 1980's. bad bank for the assets. immediate sale of collateral at whatever price. suspend liberty of promoters
carry on
nevertheless india of 2017 is closer to the robber baron period in us history of scandalous privatization of public assets and hijacking of public deposits
to wit courtesy of the wire in
nepostism
Recently, finance minister Arun Jaitley candidly admitted that the bad loan problem was largely confined to some 50 large corporate groups who had indiscriminately borrowed from banks to set up steel and infrastructure projects, especially in the power sector. These groups alone would account for over 80% of the total NPAs and stressed assets in the banking system. Latest data shows that the total NPAs and stressed assets are in the range of Rs 13 lakh crore to Rs 14 lakh crore. And these are politically, well connected corporate families who dominate election funding.
This is very important because out of the 22 odd PSU banks, about 8 to 10 large banks are the ones who have lent generously, as part of a consortium, for the same projects which have gone sour and resulted in big defaults.
In January 2016, The Times of India reported that the stock value of just one private bank HDFC became equal to that of 21 nationalised banks including the SBI. These 21 banks controlled 70% of the outstanding credit market compared to HDFC’s 6% . And yet, HDFC’s stock price was equal to that of 21 PSU banks put together.
This was the first big warning that all was not well with PSU banks. The situation has probably worsened today. In early 2017, there was the expectation that demonetisation would extinguish enough black money to enable a big infusion – about Rs 3 lakh crore – of fresh capital in banks. But that did not materialise. PSU bank lending growth registered a multi-decade low in the nine months after demonetisation. Having failed on this front, the finance ministry is now embarking on recapitalising banks on an urgent basis.
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