Nobel laureate Banerjee expresses concern over India's banking crisis

Nobel laureate Abhijit Banerjee on Tuesday (October 22) expressed concerns about the banking sector’s crisis in India and called for aggressive changes to handle the situation.

“There is a need to bring in important and aggressive changes to deal with the crisis,” he said during interactions with media here after a meeting with Prime Minister Narendra Modi.

He also stated that he would not be making any controversial statements to the media since he had been “warned” by the Prime Minister. “PM Modi started by cracking a joke on how the media is trying to trap me into saying anti-Modi things. He’s been watching the TV and he’s been watching you guys. And he knows what you are trying to do,” Banerjee claimed.

He spoke about the economic crisis in India, while Modi spoke about the bureaucracy and the reforms he was trying to bring in to “make the bureaucracy more responsive”. “It was a unique experience,” he said when questioned about the overall experience.

Also read: PM Modi meets Nobel laureate Abhijit Banerjee

Banerjee also commented on the need to bring down the stake of the government to below 50 percent in banks so that the decisions are taken without fear of the Central Vigilance Commission (CVC).

Earlier in August, the CVC had constituted the Advisory Board for Banking Frauds (ABBF) headed by former Vigilance Commissioner TM Bhasin to examine bank frauds worth ₹50 crore and recommend action.

The banking system has been afflicted by the scourge of high non-performing assets (NPAs) for nearly five years now, which has led to net worth erosion and discovery of scams in the sector, with the Punjab and Maharashtra Cooperative Bank (PMC) being the new addition.

On a contradictory note, Finance Minister Nirmala Sitharaman on August 30 had said that the profitability of public sector banks was improving as the total gross non-performing assets of public sector banks came down to ₹7.9 lakh crore at end-March 2019 from ₹8.65 lakh crore at end-December 2018.

(With inputs from agencies)