Abhijit Banerjee calls for aggressive changes to deal with banking crisis

Nobel laureate Abhijit Banerjee on Tuesday flagged concerns about banking crisis in India and called for aggressive changes to deal with the situation.

There is a need to bring in important and aggressive changes to deal with the crisis, he said during interactions with media here.

Banerjee said there is need to bring down stake of the government to below 50 per cent in banks so that the decisions are taken without fear of Central Vigilance Commission (CVC).

The banking system has been afflicted by the scourge of high NPAs for nearly five years now, which has led to networth erosion and discovery of scams in the sector, with the Punjab and Maharashtra Cooperative Bank (PMC) being the new addition.

Earlier in August, Central Vigilance Commission (CVC) had constituted Advisory Board for Banking Frauds (ABBF) headed by former Vigilance Commissioner T M Bhasin to examine bank fraud over Rs 50 crore and recommend action.

On August 30, Finance Minister Nirmala Sitharaman had said that the profitability of public sector banks was improving as the total gross non-performing assets of public sector banks came down to Rs 7.9 trillion at end-March 2019 from Rs 8.65 trillion at end-December 2018.