India’s banking sector appears unable to shake off its jinx. Years of improvement in performance tend to get erased by some exogenous shock or the other. The sector started off the post-reform phase with a ratio of gross non-performing assets (NPAs) to loans of 16.0 per cent in 1996-97, a number worth bearing in mind when analysts portray the banking sector today in apocalyptic terms.
Rapid economic growth and the reforms undertaken at public sector banks (PSBs) helped the sector recover solidly. A decade later, in 2007, the NPA level had come down to 2.6 per cent. Then the ...
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