A change of stance on PSU banks

The transition to IFRS, which Indian banks are required to comply with starting 1 April 2018, is also likely to front-load loan losses for banks

Until recent months, most policymakers seemed to be convinced that PSU banks (that is, majority government-owned banks) did not need to grow. They argued that there was abundant banking capacity: Bond markets were expanding, non-banking finance companies (NBFCs) and newly licensed small finance banks were driving innovations, and well-capitalised private sector banks were growing their loan books at more than 20 per cent a year, several times the system loan growth. 

Further, slow growth in PSU banks has seen them lose share rapidly in recent quarters, in line with the government’s belief that privatisation of the banking system can be achieved