Benchmarks for banks

Abstract

As private banks are profit-oriented and citycentric, and public sector banks are socially oriented, the performance norms for the two should be different. Public sector banks (PSBs) have been critically evaluated in the last few months because of stressed assets including rising non-performing assets (NPAs). There is a need to critically review the performance of PSBs and the factors that are responsible for such high stressed assets, especially when tax payers have to provide resources for recapitalisation.

The sectoral analysis based on latest available data for December 2014 from the Reserve Bank of India reveals that industry continued to record high stressed assets at 17.9 per cent of advances followed by services at 7.5 per cent. The retail sector, in which private banks (PRBs) have a dominant share, recorded the lowest stressed assets at 2 per cent. The sub-sectoral analysis reveals that mining, textiles, iron and steel, infrastructure and aviation are the major contributors to stressed assets, followed by food processing, engineering, vehicles, wood, paper, glass and glassware, and construction. Thus, the economic slowdown is clearly transmitting through waves and ripples across different sectors of the economy. Read more at: https://www.thehindu.com/opinion/op-ed/benchmarks-for-banks/article7474632.ece