Banking Sector Reforms in India

By Rajiv Kumar, Geetima Das Krishna, and Sakshi Bhardwaj
22 February 2016

Public Sector Banks (PSBs) in India are struggling with high NPAs (Non-Performing Assets) which has been rising steadily since 2009-10. These banks continue to face  the dual problem of significant asset quality stress and meagre capitalisation, which has impacted their growth. On 14 August 2015, Finance Minister Arun Jaitely launched a seven pronged plan – Indradhanush - for revamping PSBs of India. These seven elements include: Appointment, Bank Board of Bureau,Capitalisation, De-stressing, Empowerment, Framework of Accountability, and Governance Reforms. This has opened up a debate on whether Indradhanush framework is a much diluted version of PJ committee report and may not be enough to tackle the PSB issues and if these reform measures will help strengthen PSBs and banking sector in India.