Objectives: The concepts of NPAs (Non-Performing Assets) have been the single most difficult problem faced by the Indian Public Sector Banks. The study aims to assess the concept in Indian scenario.
Methods: The study is of descriptive nature and makes assessment based on the current situation especially on Privatization of Banks in India. It highlights the present scenario and outlines future consequences.
Findings: Privatization of PSBs is not a pro poor initiative as the poor get small loans on lower rates of interest compared to the Private Banks which would never be favorable in issuing and waiving bad farm loans. It’s a well-known fact that the private banks are not inclined to giving farm loans as easily as their counterparts in the public sector. That is one of the reasons why public sector banks have worse loans. In view of several adverse effects of NPAs in banking sector, it needs to be addressed. The provisions of FRDI bill 2017 covers bankruptcy of banks. The most controversial clause in it pertains to bailout process. This involves that assets and liabilities of stressed public sector banks can be transferred to private companies or a bridge service providers, depositors can lose their deposits under the provision of bail in , and merger, amalgamation and acquisition can lead to consolidation (or) privatization of PSBs.
Application: As part of economic liberalization, we have seen the gradual closure of our public sector industries. Privatization of banks means the economic development is pledged in front of the business empires. The fugitive defaulters gradually increase in the economy by crony capitalism. Else Indian money stills bleeds, and the financial system, the economy’s lifeblood will washout the country itself.