Pandemonium: The Great Indian Banking Tragedy

Tamal Bandyopadhyay

Description

‘The Reserve Bank of India would like to assure the General public that Indian Banking system is safe and stable.’ – RBI Statement, 1 October 2019



Why did India’s central Bank have to issue an unprecedented statement to that effect?



In Pandemonium: The Great Indian Banking Tragedy, bestselling author Tamal Bandyopadhyay takes you in search for the answer. It is a definitive insider story on the rot in India’s banking system – how many promoters easily swapped equity with debt as bank managements looked the other way to protect their balance sheets, until the RBI began waging a war against ballooning bad loans. The same troubles quickly spilled over to India’s mushrooming non-banking financial companies, which were quick to spot the post-demonetisation easy liquidity and banks’ reluctance to lend, prompting them to make the cardinal sin of borrowing short to lend long.



What really ails public sector banks, the backbone of India’s financial system? Is it the government ownership itself, or how this owner actually behaves? And just when many were rooting for privatisation as a way out, powerful bankers such as Chanda Kochhar and Rana Kapoor exposed the soft underbelly of seemingly more efficient and profitable private banks of India.



A timely and insider look at dramatic forces reshaping banking in Asia’s third-largest economy, this book is a bird’s-eye view of Indian banking and also a fly-on-wall documentary. A must-read to understand contemporary India’s challenges and economic potential.

Sujets

• Banking
• Economie gestion
• Carrera impulsada
• Lugar de Importancia Comunitaria
• Suiza
• Equity
• Icici
• Bad bank
• C. Rangarajan
• Y. Venugopal Reddy
• Business Standard
• LIC
• Raghuram Rajan
• Punjab National Bank
• Legal tender
• Pandemonium
• Run batted in
• Mutual fund
• Balance sheet
• Fraud
• Market liquidity
• Government
• Economics
• Central bank
• Collapse
• Reserve Bank of India
• Business
• Housing Development Finance Corporation
• Finance
• RBI
• Banks
• Switzerland
• Démonétisation
• Scam
• Corruption

Informations

• Publié par: Roli Books
• Date de parution: 09 novembre 2020
• Nombre de lectures: 0
• EAN13: 9788194643364
• Langue: English
• Poids de l'ouvrage: 1 Mo

Extrait

Pandemonium
 

‘The Reserve Bank of India would like to assure the general public that Indian banking system is safe and stable.’
– RBI statement, 1 October 2019
Why did India’s central bank have to issue an unprecedented statement to that effect?
In Pandemonium : The Great Indian Banking Tragedy , Tamal Bandyopadhyay takes you in search for the answer. It is a compelling story on the rot in India’s banking system – how promoters easily swapped equity with debt as bank managements looked the other way to protect their balance sheets, until the RBI began waging a war against ballooning bad loans.
What really ails public sector banks, the backbone of India’s financial system? Is it the government ownership itself, or how this owner actually behaves? And just when many were rooting for privatisation as a way out, powerful bankers such as Chanda Kochhar and Rana Kapoor exposed the soft underbelly of seemingly more efficient and profitable private banks of India.
A timely and insider look at the dramatic forces reshaping banking in Asia’s third-largest economy, this book is a bird’s-eye view of Indian banking and also a fly-on-the-wall documentary. A must-read to understand contemporary India’s challenges and economic potential.
 
Praise for the Book
‘Tamal has a deep understanding and a broad perspective of the banking and financial sector. His curiosity, willingness to listen, attention to detail and ability to simplify complexity, while posing inconvenient questions, are unique strengths. These are reflected in this book.’
– UdayKotak, MD & CEO, Kotak Mahindra Bank Ltd & President, CII
‘No other financial journalist-cum-author can read the pulse of the Indian banking system as Tamal can. A one-stop narrative of nuances and insights a reader is unlikely to get elsewhere. It’s a compelling read.’
– Deepak Parekh, Chairman, HDFC Ltd
‘Tamal writes with honesty, based on hard facts and with no holds barred. The volume will surely add to his reputation as an astute and insightful observer of, and honest commentator on, banking sector.
‘He has given us a financial sector policy thriller, difficult to put down once one starts the first chapter “Who Killed Indian Banking?” Successive chapters prove the point that investigative and analytical journalism can provide sharper insights than a whole host of heavy-duty essays.
‘Tamal’s real strength is his determination to dig deep, put lesser-known facts on decision making in the sector out in the public domain without being unduly normative or judgmental about the persons involved.’
– Rajiv Kumar, Vice Chairman, NITI Aayog
‘Our national economy has been under siege, aggravated by malfunctioning of the banking sector. This book offers valuable insights on its origin, spread and possible measures for a way out… They [the four distinguished former governors] spoke freely with Tamal because of his formidable reputation as a thoughtful, meticulous and fiercely independent columnist. In fact, these qualities shine throughout this book. I recommend this important book to professionals as well as the general public. It will benefit us all.’
– Vijay Kelkar, Chairman, India Development Foundation
‘The breadth of knowledge and attention to details shown by this veteran economic historian and journalist make fascinating reading for anybody interested in the Indian financial sector. Tamal’s superb storytelling makes the book so gripping that the reader is transported to the scene where the action is taking place. It’s an unbiased and candid account of the role played by the regulator, the investigating agencies, the business community, the bankers and the government. By the time one reaches the end of the book, it becomes clear why banking in India has been a tragedy.
‘My only complaint with the book is that it’s like binge-watching an engrossing TV series – I could not put it down until the end.’
– U.K. Sinha, Former Chairman, SEBI
‘Tamal has an exceptional record as an observer of Indian banking… The interviews with past governors of the Reserve Bank are revelatory because of their different perspectives. Recommended reading for anyone interested in the subject.’
– T.N. Ninan, Chairman, Business Standard Pvt Ltd
‘Tamal Bandyopadhyay’s magnum opus provides insights into the most important question in Indian policymaking today. With a fine understanding of banking, finance and economy and willingness to respect different perspectives, Tamal has woven a compelling tale of what has gone wrong with India’s banking system, starting from the 1990s. In telling this tale, he critically examines the role of governance, management, regulation and especially supervision of banks. In reforming these four pillars lies the solution to India’s most important policy problem and thereby the path to India becoming a $5 trillion economy.’
– Krishnamurthy Subramanian, Chief Economic Adviser, GoI
 

 
ROLI BOOKS
This digital edition published in 2021
First published in 2021 by
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Text © Tamal Bandyopadhyay, 2021
Foreword © Bibek Debroy, 2021
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To Tapan Jyoti, my elder brother, an inspiration for many in the small town where I grew up, and my sister-in-law Chhabi, for her love and affection. You know what you mean to me.
 
Contents
Foreword
Preface
Acknowledgements
Part I
THE CONUNDRUM
1. Who Killed Indian Banking?
2. The War Against NPAs
3. India’s Northern Rock Moment
4. Who will Rate the Rater?
Part II
THE HEART OF THE MATTER
5. What Ails the Public Sector Banks?
6. Whose Money is it Anyway?
7. Is Consolidation a Panacea?
Part III
EVERYTHING YOU WANT TO KNOW BUT ARE AFRAID TO ASK
8. The F Word in Indian Banking
9. Fear Psychosis
10. The Fallen Angels
Part IV
GOVERNORSPEAK
11. ‘It is an economic crisis’
C.R. Rangarajan
12. ‘The problem is how the owner behaves’
Y.V. Reddy
13. ‘PSBs have served a purpose… It is now time to move on’
D. Subbarao
14. ‘I do not see a sense of urgency or clear agenda in this government’
Raghuram Rajan
Part V
CRYSTAL GAZING
15. The Great Indian Asset Sale
16. Does the RBI Need New Clothes?
17. The Way Forward
Part VI
Charting the Ills
Epilogue: Postponing the Inevitable?
Appendix: The Stressed Sectors
List of Abbreviations
Glossary
Index
About the Author
 
Foreword
In the preface, Tamal Bandyopadhyay refers to Akira Kurosawa’s Rashomon , a metaphor for different, and often conflicting, versions of the same event.
For Indian banking, the metaphor is rather apt. Reams have been written on banking in India, not just research papers, but books too. C.D. Deshmukh, the first Indian to be appointed Reserve Bank of India (RBI) governor and later Union finance minister, did write his autobiography. Subsequent RBI governors also wrote books. Since Y.V. Reddy, it has become almost mandatory for ex-RBI governors (and a few ex-deputy governors) to author books focused on their RBI stints. At best, to use the same metaphor, it is the woodcutter’s story, not the commoner’s perspective. But I doubt Rashomon would have become such a great film without Kazuo Miyagawa as its cinematographer.
To chronicle what Tamal calls the great Indian banking tragedy, we need an external, objective and dispassionate observer as cinematographer. If you are inside the system, you may know everything about it, but you may have no sense about its place and function in the bigger picture. For years and years, Tamal has been, and still is, a widely read business journalist, across newspapers, especially on banking and finance. That brings an investigative flair and felicity in his use of language, aided no doubt by his specialisation in English literature. He is more than a columnist, having authored several books, mostly on banking.
In Lady Windermere’s Fan , Oscar Wilde had Dumby say, ‘In this world there are only two tragedies. One is not getting what one wants, and the other is getting it.’ (Later, this quote was redone by George Bernard Shaw in Man and Superman .) Why should there be a great tragedy in Indian banking? Across indicators – prevention of bank failures, number of banks (commercial, payments banks and small finance banks), bank branches and ATMs, deposits, bank credit, gross domestic product (GDP), banking standards, use of technology, digitisation, measures of financial inclusion – there have been improvements over time. Reforms, however defined, have much to do with competition and efficiency in factor markets (land, labour, capital).
Banking constitutes a critical strand of capital market reform. While privatisation of public sector banks (PSBs) is not yet on the agenda, there has been competition through private sector entry. Competition requires exit, as well as entry. The 2016 Insolvency and Bankruptcy Code (IBC) has ensured an exit for errant promoters. There is a regulator for banks, though less starkly so for non-banking financial companies (NBFCs). Within that broad reform template, there is quite a bit the country has got.
However, in thi