Are Banks the New NPAs?

Apropos the report ‘Marquee Names Lining up to Enter Bank Street’ (ET, Jul 2), it’s surprising that corporate entities such as Reliance Industries and Mahindra & Mahindra have not shown interest in a bank licence. In fact, Mahindras pulled out citing inflexible RBI guidelines. With so many riders, banking business in India is no longer attractive. The companies that would soon be blessed with banking licences would regret their decision to enter the field. Barring a few private sector banks such as HDFC Bank, most players are itching to get out. The regulatory condition on financial inclusion for the new entities has no meaning and will not be helpful to the rural folk. A few public sector banks that celebrated massive financial inclusion within a few days of opening new branches have seen massive dormant accounts in their books. Reason: banks do not know the art of making money from rural lending. 

- K V RAO, Bangalore (ET)