While PSBs claim to be diligently following RBI’s instructions to disclose and provide for bad loans, there is no clear agenda for recovery. Some banks are resorting to eyewash by ordering forensic audits, even though senior bankers are fully aware of diversion of funds and fraud. The brazen wilful defaulters openly flaunt their wealth at unbelievably extravagant overseas weddings which are often attended by top bankers. 
A large number of wilful defaulters are politically exposed persons (PEPs). Is there a game plan to make them pay up when they can harass bankers through political pressure? What about the cases where capricious government policies and lenders are at fault, projects are stalled or stuck in litigation? This is true of large infrastructure projects across sectors. The government’s only answer is to introduce a Bankruptcy Bill which has several major flaws and cannot be really effective. This was exactly the problem with the SARFESI Act that had been touted by banks and policy-makers as the panacea for bad loan issues but failed miserably. Other than this, we have seen no solutions, leave alone any sign of ‘catalysing transformation’. Instead, a newspaper reports that the government is getting ready for another Gyan Sangam in early March. 
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The right things to do are - write-off the losses, tighten loan criteria, increase reserve ratios, and make it easy for lenders to dispose off assets in case of defaults. Till these happen, we will simply be going round the wagon.
Yes, that would mean putting the economy in recession and bursting the real-estate and equity market bubbles. But in a country where less than 2% own equities, does it matter?
- Shankar Khadye
While not everything being done by current Govt may be perfect, they are far superior to the previous dispensation. Although they may not be performing to the full potential of a govt with majority, they are still positive contributors and score a 5/10 v/s the previous govt which scored a -10/10 on every single parameter.
Judging the performance of banks with reference to the bad loans accumulated or the support they need from the owners, by itself, is not rational. Comparison is always with private sector banks. To get a clear picture, one has to remember that PSBs’ share in banking business is three times that of private sector banks. What prevents the private sector banks from increasing their share in business is a riddle policy makers and regulators should solve, at least at this stage, before succumbing to the pressure to again ‘privatise’ public sector banks.
It may be recalled that the context of bank nationalisation was refusal of private sector to plough back deposits mobilised from small savers to sectors that benefited inclusive economic development. The residual and new private sector banks continued to be selective in providing credit and the social responsibility of banking system was largely met by PSBs. The corporates which did not want to follow the banking discipline used their influence to get credit from PSBs. All these together resulted in differential treatment for public and private sector banks. Given a level playing field and semblance of functional autonomy, the future of Indian banking is safe in the hands of PSBs.
M G Warrier, Mumbai