For the treasury managers in Indian banks, fiscal year 2018 has been a nightmare. The next fiscal year, which starts next week, could be a nightmare for the government. The government plans to borrow Rs6.
Sometime in late 2017, billionaire diamantaire Nirav Modi walked into the office of the chief executive officer (CEO) and managing director of a large Indian private bank in Mumbai with two of the bank’s directors in tow. The meeting did not last long. No, Modi—who has drilled a big hole in the balance sheet of India’s second largest government-owned bank, Punjab National Bank—was not looking for fresh funds for any of his companies.
Between 26 October, a day after the government announced a Rs2.11 trillion capital infusion into public sector banks (PSBs), and 8 March, shareholders of these banks have lost Rs1.56 trillion in combined market value.
You must have seen the popular TV advertisement campaign for a men’s deodorant brand where different sets of people casually ask each other, “kya chal raha hai?” (‘what’s going on?’). The reply, always, is: “Fogg chal raha hai” (Fogg is very popular these days, referring to the brand). Newspaper headlines and prime time TV discussions over the past fortnight may encourage us to rephrase this: “kya chal raha hai?” “Fraud chal raha hai.