Expect banking revival in 2021

The potential turnaround in banking means the government does not need to act in haste, only to repent at leisure

2020 was a terrible year for the Cassandras pronouncing on the Indian economy. They said the economy would shrink by double digits. They are being proved wrong. They said the banking sector would end up with non-performing assets (NPAs) at a new high. Most likely, wrong again.

The resilience of the banking sector in 2020 was a huge surprise. Gross non-performing assets (GNPAs) stood at 7.5 per cent at the end of September 2020. The RBI’s latest “Trend and Progress in Banking” says that, but for the standstill on recognition of NPAs, GNPAs in the system would have been higher than