The risks from India’s rotten banks

In this article, the banks and financial institutions and financial systems are facing financial
crisis due to inadequate deposits of investments. The economy is falling down as the banks
are getting played by the shadow banks and bad banks. Shadow banks are those banks who
borrows short-term money from different banks and together redeem the long-term loan of
their own. The crisis had started long back, first was during the year 2005, when the
conventional banks were controlling the 4/5th of the economy’s assets which was lent for the
development of infrastructure and industrial projects, backed by wealthy business persons or
simply called ‘Tycoons’. The next phase of the crisis was in the year 2016, where shadow
banks had control over the remaining 1/5th portion of the economy’s assets. The crisis came to
light when the government demonetized the large banknotes which lead to people to deposit
money in banks and mutual funds. Shadow banks play a crucial role in conducting fraudulent
and bogus accounting. This brought crisis among the farmers as they were not able to borrow
funds for buying tractors and motorbikes. Also, with the effect that shadow banks started to
face severe decrease in borrowing money, led the infrastructures like building projects frozen.
The government had taken effective steps but failed to provide adequate funds to the state
banks in the country. The government also decided to merge some of the state banks to avoid
the lack of funds in lending. The central bank RBI had issued to cut the interest rates 5 times
in 2018 believing it would help the economy in its growth and development.
I agree with the views the article has mentioned in the end. Yes, India needs to be refurnished
and overhauled by privatizing the state banks and must strictly issue steps to the shadow
banks to wound up as they are failing to make funds and also it should be made possible that
the shadow banks should also be made to follow the rules and guidelines regulated by the
RBI as the other banks. By privatizing the state banks of the country, it also helps in
preventing from politicians taking control over such banks. The rehabilitation for the country
is essential as the economy is down and has to boost and improve the financial systems and
development in the banking industries. Thus, the country would thrive and will be free from
any fraudulent transactions or activities & bogus accounting, which would lead to effective
growth in the financial base of the country.