Chaos in Indian Banking
The fact that Bad Loans are a serious malaise in the Indian banking system is undeniable. Yet, there have been serious debates about the remedies that can be administered for treatment. The IBC was a crucial step to solve this crisis. We hope to comprehend the code's strength, and what other reforms can complement it.
While understanding the steps needed, we also wonder about the reasons that brought us to the brink - especially the endogenous reasons. The recent allegations of nexus between bank executives and loan defaulters allude to lack of integrity in banks’ operations. There is a need to understand how corporate governance practices contributed to the mess and the ways to avoid it in the future.
Across different countries, there has been a proliferation of conflicts between the governments and the central banks. Recently, India witnessed a similar struggle. To avoid similar conflicts in the future, how can the government and RBI conciliate to achieve a golden mean in their differing objectives? How can we preserve, and if possible enhance, the RBI's autonomy?