IIPM Publication: McKinsey blames the obligation on Indian banks...

For this, McKinsey blames the obligation on Indian banks to hold 25% of their net demand and time liabilities in government securities; and recommends that the same be reduced. This sounds puerile, mainly because RBI has been praised by even international bodies for undertaking timely reforms on these fronts. A much better way perhaps would have been to encourage Indian banks to actively consider securitisation of loans, which has helped countries like UK, China et al to lend more than what they have (their credit-deposit ratio is more than 100). Clearly, McKinsey’s report is just another example of how India is being forced to undermine its priorities. Such reports hardly pay any consideration to socio-economic responsibilities. By the way, the corrigendum we mentioned referred to something else, which would surely give horrors to our dear consultants. The priority sector lending by Indian banks is actually 40% of total credit, instead of the 36% that McKinsey wrongly mentions. That’s is being Rs.460,455 million off the mark. Now how’s that for being other“wise”!


For complete IIPM Editorial Article, please click here...

Source: IIPM Publication, Editor: Arindam Chaudhuri