It has been a long weekend for Indian banks, but not the bankers. In fact, most senior bankers have been working overtime for the past few weeks to put in place systems and processes to ensure a smooth transition from the so-called base rate or minimum lending rate to the regime of marginal cost-based lending rate or MCLR that kicks off on 1 April. Theoretically, Indian banks now need to change the MCLR 60 times a year as opposed to say two or three changes annually that the base rate has typically undergone.
The second edition of Gyan Sangam—a forum of bankers, regulators and policymakers created by the government to brainstorm critical issues that have been plaguing the banking sector—was a relatively tame affair. Bulging non-performing assets or NPAs of the state-owned banks, recovery of bad loans, reforms in terms of giving the bank employees ownership in the form of stock options and consolidation dominated the discussions. At the end of it, on Saturday, finance minister Arun Jaitley reiterated the government’s commitment to bank consolidation.
The Indian banking industry has no dearth of defaulters. Not even the so-called “wilful defaulters”, who have the capacity to pay but don’t or divert loans for other purposes. In the fiscal year ended March 2015, there were as many as 7,035 wilful defaulters who had failed to repay loans worth Rs.