Bad Money : Inside the NPA Mess and How it Threatens the Indian Banking System

by Vivek Kaul

Over the last decade, Indian banks in general and the government-owned public sector ones in particular have gradually got themselves into a big mess. Their bad loans, or loans which haven't been repaid for ninety days or more, crossed Rs 10 lakh crore as of 31 March 2018. To put it in perspective, this figure is approximately seven times the value of farm loan waivers given by all state governments in India put together. And this became the bad money of the Indian financial system. Why were the corporates unable to return these loans? Was it because they had no intention of doing so?Who were the biggest defaulters of them all? Are Vijay Mallya and Nirav Modi just the tip of the iceberg?How much money has the government spent trying to rescue these banks?How are the private sector banks gradually taking over Indian banking?Is your money in public sector banks safe?How are you paying for this in different ways?And what are the solutions to deal with this? In Bad Money, Vivek Kaul answers these and many more questions, peeling layer after layer of the NPA (non-performing assets) problem. He goes back to the history of Indian banking, providing a long, deep and hard look at the overall Indian economy. The result is a gripping financial thriller that is a must for understanding a crisis that threatens our banking system and economy.

Genres: Economics, Nonfiction, Finance, India, Business, Politics, Banking

360 pages, Hardcover

Published March 2, 2020

About the author

Vivek Kaul is a writer who has worked at senior positions with the Daily News and Analysis(DNA) and The Economic Times, in the past.

Currently he works as an economic commentator. Other than Equitymaster, his writing has appeared across various other publications in India. These include The Times of India, India Today, Business Standard, Business Today, Business World, The Hindu, The Hindu Business Line, Indian Management, The Asian Age, Deccan Chronicle, Forbes India, Mutual Fund Insight, The Free Press Journal, BBC.com, Quartz.com, DailyO.in, Business World, Huffington Post India and Wealth Insight.

In the past he has also been a regular columnist for Rediff as well as Firstpost. He has lectured at IIM Bangalore, IIM Indore, IIM Kozhikode, TA PAI Institute of Management and the Alliance University (Bangalore).

Reviews

[Suman Joshi · Rating 4 out of 5]

Does a writer write to educate people beyond his circle or does he write to get applause from among the fraternity ? Vivek Kaul with this book will get the latter without losing the former .. in other words, he’d get the Critics award as well as the Popular award at a film awards ( since he uses film analogy so often )

Keeping the layperson at the heart of the book, he explains in simple, lucid terms the problems that the banking sector in India is currently facing. He provides historical perspective without making it too boring - the section on the power sector particularly was interesting for me .

The only small miss I saw was a few spelling and editing errors which would be taken care of in the following editions , I hope .

Great read for all. I hope his incentive to write and ours to get educated stay aligned 😀

[E.T. · Rating 4 out of 5]

What caused the NPA crisis ? AFAIK the UPA govt indulged massively in crony-capitalism and turned a blind eye towards the mismanagement of public-sector banks. The structural problems of the power sector (it cant be more weird) , the real-estate sector and the economic crisis in 2008 made it far worse.
The true extent of the mess the economy was in 2014 was revealed under Raghuram Rajan and Urijit Patel. And the Chinese Covid-19 - the big daddy of black swans has made it worse.
Has the NDA govt done enough to reverse it ?
From my reading of the book, I dont think so. Far more could have been done. Frankly , I think it may be beyond the knowledge/skills of the current establishment.
And so, as he reminded us in “India’s Big Government”, India’s govt runs on cash accounting basis. And a cynical me is reminded of Ponzi schemes. A scheme in which you have to subscribe !!
This was my second book by the author after the equally good “India’s big government.” Vivek Kaul is always a delight to read or listen to. Simple but not simplistic and avoids being dry while maintaining depth for the layperson.

[Anuj Sharma · Rating 5 out of 5]

Brilliantly Written!

I have been a fan of Mr. Vivek Kaul ever since I was introduced to him on The Seen and The Unseen podcast where he's a frequent guest. I admire his skill of explaining very complicated and seemingly intimidating concepts in not just a very easy to understand but also a very enjoyable manner. And this book does exactly that!

Even when it deals with a dry concept such as NPAs and Banking sector, policies, regulations etc., the narrative is so fluid that it reads like a fascinating story. And having been witness to most of the scams and events mentioned in the book, I enjoyed reading beyond what was known to us in the public domain. Now that doesn't mean that it unveils some secrets or hidden government conspiracies. The book talks about reports and recommendations that are right there under our eyes in the public domain but nobody bothers to read them!

This is where I feel lies the true genius of Mr. Kaul. I am amazed at the level of research he puts in his books (and also in his articles) and the amount of data crunching he does. *I would love to take a class on Excel from him* But the best part is that he condenses and explains his research in such a manner that even a "Quant Illiterate" like me can make sense of the things!

The book is full of tables and graphs and if you feel nauseous at the sight of such things (like me) then you can skip them because Mr. Kaul explains each table and graph by summarising the essence behind the numbers.

Bad Money : Inside the NPA Mess and How it Threatens the Indian Banking System begins by giving a short and quick history of banking in India. It also explains some basic banking and financial concepts which I found to be very helpful. For example, I understand now how interest rate works and why RBI cutting down the Repo rate won't always have any impact on my EMI. It also helped me to understand that money in the bank is not 100 percent risk-free because it is after all an investment. This was kinda eye-opening for me, even though I knew it intuitively.

The book goes beyond the usual suspects and large NPAs like Vijay Mallya and Nirav Modi and warns about deeper crisis and bigger defaults that are lying right there in front of us behind the headlines and media stories.

The book ends with some really good recommendations and I know for a fact that Mr. Kaul is read by people in power in the financial circles and I hope they follow at least a few of his recommendations because from what I understand is that we have not really learned our lessons and the next NPA mess is just across the corner!

Oh, and we can all see what has happened to IBC during the COVID-19 Pandemic!

I would definitely recommend this book to anybody who has even a little bit of interest in banking and financial matters and wants to learn a few basics without getting bored by the technicalities or jargon. Reads like a fast-paced thriller!

[Kapil Bathija · Rating 5 out of 5]

We have all heard of the infamous Nirav Modi and the whopping $2 billion he embezzled a couple of years ago, but did you know that not only is he not the only one, but he is not even a 'big fish' compared to some other, lesser known embezzlers?

We have all heard of loan 'melas' followed by loan forgiveness programs (bread and butter of every serious politician), but have you stopped to think of its unintended/hidden consequences?

We rush to judgement every time we hear of the government recapitalizing PSBs; or are quick to blame big builders who are unable to complete their massive infrastructure projects, but did you stop to think the problem is systemic?

Vivek Kaul does a fantastic job tying together the history of PSB and poor (albeit well intended) public policies to give us a complete picture covering all of the above and more. Not only is his book well researched with verifiable facts, but it is non-technical (while retaining all relevant economic information) and strays away from being opinionated.

I personally like the fact that the book does not promise 'quick fixes' for the current crises, but rather makes an honest effort to be as object as possible.

A must read for anyone interacting with Indian banks in any capacity!

[Shubhanshu Dubey · Rating 5 out of 5]

India was reeling under the pressure of sub-par economic performance even before the Covid-19 pandemic overshadowed the discourse. The household consumption was declining, the investment (both private and public) to GDP ratio was falling along with the exports leading to a slowdown. The conventional wisdom as well as the intellectual circles blamed Demonetisation and the unprepared roll out of GST for the current state of economy. But did the problem really start there? Or was there some underlying problem all along. Why was India placed in the Fragile Five economies at the end of 2013? Why did the NPAs, when analysed closely, comprise of almost all the loans distributed during the 2009-2012 era. The book addresses such questions.

Bad money: indside the NPA mess and how it threatens the Indian banking system by Vivek Kaul is a comprehensive compendium of issues surrounding the larger financial system in India. It delves into the NPA issue which plagues our banking system and gives us a detailed account of what caused these issues in the first place. The corruption in the bloated public sector banks along with the greed of private sector ignited the problem. The policies and hasty decisions of the following political dispensation only added fuel to the fire.

The NPA mess was recognised gradually taking into consideration the trust of the market in the Indian economy. However, it was perhaps too slow to help the economy recover. The measures such as S4A scheme, the PCA framework or the PARA bad bank were good on paper, but were never implemented with the rigour as they should have. Although the RBI wasn't caught sleeping but for whatever reasons, it wasn't quick on its feet to address the issue.

The government on the other hand wishes to clean up this mess using the insolvency and bankruptcy code which shows promise in the initial years. However, what's more important is to make some structural changes to make sure no such thing happens again. Basically, the indiscriminate lending that happens during the period of stability must be stopped or else we would have much more Bhushan Steels and Kingfishers and Nirav Modis. This can only happen if the banks are not in the clutches of the government.

Recommended to anyone interested in the present state of Indian economy.

[Yogin Vekariya · Rating 5 out of 5]

Honestly, I haven't expected much from this book but this book turned out the best I have ever read on Indian Banks. This is fabulous read.

As someone working in financial services, I like many others had been closely following the event - "NPA Crisis" of Indian banks in newspapers. What this book does is it puts all the familiar peices perfectly in place and it builds amazing story around them.

The author is very well read and makes references to dozens of books in between. He has provided varied perspectives including behavioural one around the crisis.

This book is meticulously researched, contains waterfall of numbers. However, the language employed is very simple, lucid and easy to read for anyone. Highly recommended for ones who takes interest in related subjects.

[Venky · Rating 4 out of 5]

In the memorable American Christmas fantasy drama film “It’s a Wonderful Life” starring James Stewart, there arises a bank run in a small town and the protagonist (James Stewart’s character George) uses his own money to stop the institution from dissolving. Released in 1946 and directed by Frank Capra, based on the short story and booklet The Greatest Gift, by Philip Van Doren Stern “It’s a Wonderful Life” is now considered one of the greatest films of all time. It was nominated for five Academy Awards, including Best Picture, and has been recognized by the American Film Institute as one of the 100 best American films ever made.

Fast forward to 2019. On September 23rd, the Reserve Bank of India placed Punjab and Maharashtra Cooperative (“PMC”) Bank, an urban co-operative bank under what is known in banking parlance as ‘Directions.’ Under these Directions, depositors could withdraw only up to Rs.1000 from their respective accounts. Much angst, trepidations and apprehensions later, the withdrawal limit was increased to Rs.50,000 on the 5th of November thereby alleviating the concerns of a greater part of 78 percent of the depositors.

Vivek Kaul is a writer who has worked at senior positions with the Daily News and Analysis (DNA) and The Economic Times. Also, the author of the Easy Money trilogy, Mr. Kaul’s latest book, “Bad Money” is an arrestingly compelling discourse on the burgeoning Non-Performing Assets (“NPAs”) that have racked India thereby causing immense stress to the banking eco system. As per Mr. Kaul, as of 31 March 2019, the overall bad loans of banks stood at a staggering Rs 9,36,474 crore. These bad loans were primarily the result of defaults by corporate borrowers – the biggest of them being Bhushan Steel, which had defaulted on over Rs 56,000 crore.

To maintain the health of this flailing banks, the Reserve Bank of India over a period of 8-9 years invested Rs 2,91,504 crore by way of ‘recapitalization’ into these ailing banks. But what is it that results in the accumulation of such an incredible proportion bad loans by the banks in general and by Public Sector Banks (“PSBs”) in particular? Mr. Kaul attempts to answer this fundamental question and in this endeavour takes his readers back in time to the formation, constitution and birthing of the banking eco-system in India. With a view to put a check on the proliferation of professional and unscrupulous moneylenders, the then government decided to nationalize the erstwhile Imperial Bank of India and establish the State Bank of India (SBI). SBI was established on 1 July 1955, with all the assets and liabilities of the Imperial Bank being transferred to it.

The second and the most controversial phase of bank nationalization occurred in the year 1969 when the then Prime Minister Indira Gandhi, unilaterally decided to implement a programme of nationalizing private banks. As Mr. Kaul highlights, “On 18 July, Gandhi met I.G. Patel, who was then the Economic Affairs Secretary in the central government. She asked him if banking was under his charge. He said that it was. After this, as Patel recalls in ‘Glimpses of Indian Economic History: An Insider’s View’, Gandhi told him: ‘For political reasons, it has been decided to nationalise the banks. You have to prepare within 24 hours the bill, a note for the Cabinet and a speech for me to make to the nation on radio tomorrow evening. Can you do it and make sure there is no leak?’. Patel told her that what she wanted would be done. At the same time, he offered her two suggestions. The first being that foreign banks should not be nationalized and the second being that there was no need to nationalize all the banks – only banks which accounted for 85–90 per cent of the total banking business should be nationalized. Gandhi agreed, and told him that she would leave the details to him. An ordinance to nationalize six more banks was issued on 15 April 1980. The six banks that were nationalized were Andhra Bank, Corporation Bank, New Bank of India (which was merged into PNB after it ran into trouble later), Oriental Bank of Commerce, Punjab & Sind Bank, and Vijaya Bank (since merged with Bank of Baroda).

Mr. Kaul reveals in a fascinating and jaw dropping manner the excesses in lending practices resorted to by the PSBs under various Government directives following a report submitted by the Gadgil Study Group which identified huge credit gaps prevalent in key sectors like agriculture. Under the garb of “priority sector lending”, the PSBs were directed to disburse loans with gay abandon with nary a need for either due diligence or credit worthiness assessments of the borrowers. Extravagant “loan melas” were organized under which loans would be distributed to the public at mass gatherings. To quote Mr. Kaul, “one politician who really pushed for loan melas organized by PSBs was Janardhana Poojary. Poojary was the minister of state for finance between December 1984 and 1987. A magazine profile of him written in 1987 said: ‘To watch Poojary at a loan mela is to see the actor merge with the politician.’” It came as no surprise when defaults soon became the norm necessitating loan waivers. “The first nationwide loan waiver was announced by the then deputy prime minister, Devi Lal, who was himself a large farmer, in 1989. It was done through the Agricultural and Rural Debt Relief Scheme (ARDRS), 1990.” With the liberalization of the Indian economy in 1991, the trajectory of the growth rate took pointed northwards and this positive optimism further boosted the lending practices of the banks in India. “In 2003–04, the total bank lending to industry had stood at Rs 3.35 lakh crore. This jumped to Rs 26.16 lakh crore by 2013–14 in a decade. This was a jump of 681 per cent.” The financial recession of 2008 however dampened the Keynesian animal spirits and projects began to be abandoned or shelved. In February 2008, Finance Minister P. Chidambaram announced a farm loan waiver, which eventually cost the nation around Rs 71,680 crore. Since November 2008, the central bank pumped Rs 3,00,000 crore into the financial system.

Mr. Kaul exposes the nexus between the banks and the crony capitalists by providing two powerful examples. The first example takes the form of regulatory forbearance. Forbearance means to hold back, to show restraint. “In the normal scheme of things when companies were not able to pay the loan, the banks should have seized the collateral and sold it to recover the loan.” Instead, the RBI came up with myriad restructuring programmes. At one point in time, as Mr. Kaul highlights, there were twenty-eight different circulars on various forms of loan restructuring. “In fact, by March 2015, the total corporate loans subject to restructuring had stood at Rs 5,28,538 crore. It had stood at just Rs 10,210 crore in 2006–07. In fact, to some extent this was also a case of what behavioural economists call the sunk cost fallacy. The fallacy shows up in many areas of life. Right from trying to finish a boring book to remaining in a bad marriage or an abusive relationship for that matter. Nobel prize winning psychologist Daniel Kahneman in his book Thinking, Fast and Slow defines this fallacy as ‘the decision to invest additional resources in a losing account’.”

Another key reason for bank defaults is the unfortunate separation between knowledge and power. Bankers were doling out funds to industrialists with bare minimum due diligence preceding such disbursements. “In fact, many did not even do their independent analysis and depended on SBI Caps and IDBI to do the necessary analysis. Any such analysis introduced a weakness into the system and multiplied ‘the possibilities for undue influence Bankers chasing industrialists. This practice resulted in the borrowers gaming the system by resorting to a practice referred to as “gold plating.” Paraphrasing Mr. Kaul, “let’s say a business promoter approached a bank for a loan of Rs 20,000 crore to build a steel mill. Of the total project cost, the bank would give a loan Rs 15,000 crore and the promoter would bring in Rs 5,000 crore. So far so good. The thing is that the promoter knows that the mill can be built for as low as Rs 10,000 crore. This is the gold plating. The promoter has passed off a project which costs Rs 10,000 crore at best as something which costs Rs 20,000 crore. He gets a loan of Rs 15,000 crore against it. The difference between the loan amount and the actual cost of the project is the amount that the promoter can pocket.154 In this case, it works out to Rs 5,000 crore. This Rs 5,000 crore is also his investment in the project. By pocketing Rs 5,000 crore of the loan amount, the promoter basically has not invested any of his money in the project. Hence, the risk that he has in the project is zero.”

In March 2007, just ten large conglomerates owed the Indian banks a jaw dropping sum of Rs.99,300 crores. This constituted approximately 5.7% of the total disbursements by the banking system! These ten defaulters were Adani, Essar, GVK, GMR, Lanco, Vedanta, Reliance ADAG, JSW, Videocon and Jaypee. Mr. Kaul also raps the RBI on its knuckles for being blissfully reticent about the issues faced by the banks in the form of an unhealthy accumulation of bad loans. A classic example being the case of Infrastructure Leasing & Financial Services (IL&FS). “In October 2018, the government superseded the board of the company, which was believed to be in a financial mess. By the time, IL&FS and its subsidiaries started to default, its problems were not on the radar of the banks which had lent money to it. The entire IL&FS group had a debt to equity ratio of close to 17:1 and a total debt of a little over Rs 91,000 crore as on 31 March 2018. In a report, the RBI found that IL&FS had not declared bad loans in a period of four years up to 31 March 2018.”

Mr. Kaul also acknowledges certain concrete measures that were instituted by the RBI to inculcate a semblance of discipline into the lending practices of the banks. The Insolvency and Bankruptcy Code (“IBC”) of 2016 was preceded by an Asset Quality Review in mid-2015, which forced the banks to recognize bad loans in their books. The government also introduced the Indradhanush reforms under which the post of the chairman and managing director of a PSB was split. A Banks Board Bureau (BBB) was set up. The BBB, it was said, would be a body of eminent professionals. The former Comptroller and Auditor General Vinod Rai was appointed as its first head. The IBC itself as Mr. Kaul demonstrates has made some tangible progress. “…on 13 June 2017, recommended that ‘12 accounts totaling about 25 per cent of the current gross NPAs [bad loans] of the banking system would qualify for immediate reference under IBC.’309 These twelve companies which had defaulted on a huge amount of banks loans were Essar Steel, Monnet Ispat and Energy, Bhushan Steel, Bhushan Power and Steel, Era Infra Engineering, ABG Shipyard, Jaypee Infratech, Amtek Auto, Alok Industries, Jyoti Structures, Lanco Infratech and Electrosteel Steels. Candidates. Between December 2016, when it came into force, and September 2019, a total of 2542 defaulting companies have been admitted into the corporate insolvency resolution process (CIRP) adjudicated by the NCLT. Of this, a resolution plan has been approved in 156 cases. Given that 1045 cases have been closed, in nearly 15 per cent of the cases a resolution plan has been approved. The total claim of the lenders stood at Rs 3,32,087 crore. Of this, Rs 1,37,919 crore, or around 41.5 per cent, has been recovered. This is clearly better than the recovery which was happening in the pre-IBC era. Also, if these firms were to be liquidated, the liquidation value would have come to Rs 74,997 crore. So, clearly, the recovery through CIRP looks much better.”

But there is still a long way to go before the mess that is bad loans can be reasonably cleaned up. One significant spoke in the wheel according to Mr. Kaul is an excessive degree of Government intervention. The P.J. Nayak Committee had in an earlier study commented that: ‘Governance difficulties in PSBs arise from several externally imposed constraints. These include dual regulation, by the Finance Ministry in addition to the RBI; board constitution, wherein it’s difficult to categorise any director as independent; significant and widening compensation differences with private sector banks, leading to the erosion of specialist skills; external vigilance enforcement though the CVC (Central Vigilance Commission) and CBI (Central Bureau of Investigation); and limited applicability of the RTI Act. A more level playing field with private sector banks is desirable.’ The top brass of the Public Sector Banks, unlike their counterparts in the private sector are incredulously insulated from any wrongdoings or malpractices. The RBI made Rana Kapoor, one of the founders and the managing director and CEO of Yes Bank forcefully retire when it was found that Yes Bank had under reported its bad loans by Rs 10,470 crore in 2015–16 and 2016–17. In October 2017, the RBI had fined the bank Rs 6 crore for breaching standards on bad loans recognition. And yet when the unscrupulous diamond magnate Nirav Modi coolly deceived the then second largest PSB in the country, making it poorer by a whopping Rs 12,646 crore loss, nothing happened to the MD and CEO of the bank.

Mr. Kaul’s book is meticulously researched, and the reader must contend with a phalanx of tables and a waterfall of numbers. However, the language employed is easy on the eye and explains every fact with a clarity that is refreshing. “Bad Money” would make for a handy primer for the expert as well as the uninitiated and would be a great refresher for every economics student and policy maven.

[Ved Gupta · Rating 5 out of 5]

I learned more about banking and many other sectors from this book than reading multiple sources. This book also helps understand the NPA mess of Indian public banks and how they are linked to events that happened in the 90s. You also get a perspective that every single government understands the problem and also understands the solutions but these solutions don't get implemented because of lack of will and political risk that such reforms could bring. This was a fantastic read.

[Harsha Varma · Rating 4 out of 5]

Tldr version:

This is a useful primer on India’s non-performing loan (NPL) problem. The book has a lot of interesting data points and provides an accessible story on how the Indian banking system ended up being saddled with bad loans.

Longer version:
Indian banks have one of the highest NPL ratios in the world at 9.3% by the end of 2019. The corresponding NPL ratio for Public sector banks (PSBs), which dominate the banking system, is 12.7%. Does this affect us? Yes.

When banks have non-performing loans, they need to take provisions against possible losses on these loans. Provisions affect the profitability of the bank and erode capital/ equity. The government, which is the owner of the PSBs, needs to recapitalise them when their capital is eroded. The money for this often comes from taxpayers' pockets. Money that could have been spent on education, healthcare or infrastructure is now spent on accounting for the inefficient lending practices of the banking system. Further, these banks are not in a position to lower interest rates as they need to maintain profitability to take care of provisions. So, the good borrower ends up subsidising the bad borrower by paying higher interest rates.

Why/ how of the NPL problem:

Indian economy, experienced a boom during 2003-07, with double-digit nominal growth rates. Boom period typically leads to higher risk tolerance. Risk tolerance opens investors/ banks to increased lending. Competition among banks led to falling lending standards. Firms launched new projects on the back of aggressive growth projections, setting off the biggest investment boom in the country’s history. Many projects were launched with not enough promoter equity and funded mostly from bank credit.

Post the Global Financial Crisis (GFC), the economy cooled off and growth rates normalised. PSBs were encouraged to lend to get the economy back on track. The government turned Keynesian and increased its expenditure in 2008–09 and 2009–10. Fiscal deficit jumped to over 6% of GDP in FY 09 and FY 10, from 2.6% in FY 08. Interest rates were kept low for a while post the GFC to aid growth. This period of easy money led to inflation which led RBI to increase rates again.

Over the next few years, Companies which had borrowed aggressively faced challenges. Their aggressive growth projections did not materialise. High interest rates added to their debt burden. Delays in getting clearances, problems in land acquisition and policy road-blocks led to delays in completion of projects. The slowdown in the economy coupled with delays in project completion and high interest rates made many projects unviable. There were sector specific problems as well in sectors like power, iron & steel and telecom.

Banks were willing to restructure these loans, mostly by ever-greening. New loans were disbursed, often to repay overdue interest. This helped keep the account from turning into an NPL but further added to the debt burden of the over-leveraged companies. Total bank lending to industry jumped to INR 26.2 tn in 2013-14 from INR 3.3 tn in 2003-04, a CAGR of 22% over 10 years! RBI finally recognised the problem and initiated an Asset quality review of banks. Banks started recognising NPLs in their books, which now stand around INR 10 tn. As the Economic Survey of 2016-17 points out, we have a twin balance sheet problem: over-leveraged companies that are unwilling to invest and banks with fragile balance sheets who are not in a position to lend.

Are there any solutions?

Yes. At a micro level, every loan disbursal has to ensure that promoters have enough skin in the game. Promoters' incentives and pay-offs have to be in-line with how the projects perform.

At a macro level, the PSBs need to be subjected to market and regulatory discipline. The reforms needed have been enumerated by multiple committees formed by the government over the past thirty years. Government should divest its holding in PSBs, and be an investor, not the promoter. It should let the bank’s management and its board do their job, like in the case with private sector banks. They should operate without any interference from the Department of Finance. But in a messy democracy, the political will to implement such a solution is tough to find. We need something Thatcheresque!

Caveat:
The economy is a complex machine because it deals with the real world. Yet, we need to simplify it, because our brain suffers from cognitive limits, or what psychologists call ‘bounded rationality’. So, we resort to narratives which explain complex stuff in simple terms.

[Mihir Parekh · Rating 4 out of 5]

“All are equals but some are more equal than others”

- George Orwell in ‘Animal Farm'

And these more equal category of borrowers, mainly corporate one, are at the heart of NPA problem of Indian banks, mostly Public Sector Banks. Vivek Kaul's 'Bad Money' unravel this NPA mess chronologically with some historical contexts of Indian Financial System. Lucid language, ‘simple but not simplistic’ explanations, neutrality of arguments, all this with good story telling makes this book a enjoyable read. Being a book on economics, author has put lots of statistics in it but it never hinders flow of reading. Informative, insightful and not to be missed at least by Bankers !

[Shekhar Singh · Rating 5 out of 5]

The book is very well structured and well written. All the reasonings, facts and numbers are provided while explaining a particular issue or idea. If you keep interest in finance sector and economics, it’s a must read.
I was already disappointed at how the governments have been taking the taxpayers for granted with their careless, selfish and corrupt decisions. This book highlights the same with facts. Vivek Kaul has also provided potential solutions to fix things, he has also listed all the suggestions by economists those were ignored by the governments. I wish all the relevant people read this book, get aware and contribute in some way.

[Aditya · Rating 4 out of 5]

We hear a lot about NPA and public sector banks in the news but it is difficult for someone who does not belong to that particular sector to understand about it. This book untangles the whole issue and presents it in a simple way with right combination of statistics. If one wants to know about the situation of NPA and about the banking sector in brief, this book is best to begin with.

[Ashutosh Dwivedi · Rating 4 out of 5]

A lucidly written book that takes you through the entirety of the ongoing banking crisis in India while giving the necessary historical context as well. Great light read to familarize yourself with the problems and the solutions.

[Suman Srivastava · Rating 4 out of 5]

Very detailed and very well researched. Writing style isn’t brilliant. Hence the four stars.

[Sourav · Rating 5 out of 5]

Well researched and written book on NPA crisis in India during 2012-2019. The origin of NPA issues in PSBs, why PSBs, RBI intervention and current stare, everything is covered in this book.

[Sudarshan · Rating 5 out of 5]

A must read for every Indian taxpaying citizen.
For reasons we all know, the bank NPA problem hasn't got the limelight and the mind space amongst Indian taxpayers.

A color of partisanship has been added wherein one faction of the republic blames the other (Congress v BJP, vice-versa etc).

In this book with his lucid writing, plain & simple language Vivek Kaul explains the NPA mess that afflicts the Indian economy. Through easy to understand prose, charts & tables, Vivek explains the issues at hand with utmost clarity. I also recommend his other book India's Big Government which would make a terrific read with this. That should give the reader an idea of what ails the Indian economy.

This is a masterful work and Vivek's erudition shows. I also appreciate getting great book recommendations from the various excerpts from the books that are cited in this work.

[Abir Kar · Rating 4 out of 5]

Vivek Kaul's book took me by surprise. I was expecting a semi interesting primer on the NPA mess. I was even okay with the book being boring - it was the subject matter that interested me and the author didn't need to be Michael Lewis to keep me hooked. I was expecting it to be one of those books you read in bits and pieces until you are done one day and you happen to know a little bit more about the subject. I was wrong. Very wrong.
Mr. Kaul writes in a pleasant conversational tone but doesn't lose any of the nuances of the subject matter at hand. He is very much a numbers guy and I for one greatly appreciate it. I detest it when authors do a lot of hand waving without saying anything substantial. The book is divided into short chapters of varying lengths - so it is possible to read in short bursts- and the chapters deal with everything from the birth of State Bank of India to the Nirav Modi Scam( spoiler : he was a scapegoat for a much larger problem). The author doesn't shy away from using technical terms but always takes the time to explain them - and that wins him another brownie point from me. I have been an avid reader of his articles and have recently discovered that he has a podcast(Econ Central) so I guess this is someone I am going to follow very closely.
I feel this is a book everyone should read because we have a huge problem of financial illiteracy in this country and the only way things will get better is when we realise that we have been hoodwinked. H.L. Mencken said - “For every subtle and complicated question, there is a perfectly simple and straightforward answer, which is wrong". For years we have had simplistic ideas of the financial system even though it is deeply entrenched in our lives. It is high time we stop seeking the easy simplistic answers(and wrong ones at that mind you!) which give us comfort and start asking the right fucking questions.

[Mamunuru Shankar · Rating 5 out of 5]

There is something about Vivek Kaul that draws his fans to whatever he writes, be it his columns or be it his books. Perhaps it is his ability to make complex economic issues very accessible. He keeps complicated economic concepts simple but never makes them simplistic. His lucid prose and his subtle sense of humor make his books unputdownable reads. The present book “Bad Money”, as the tag line- “Inside the NPA Mess and How It Threatens the Indian Banking System”-suggests, is a comprehensive exposition of the Indian banking system, its evolution, and its predicaments. He explains how government control over Public Sector Banks (PSBs) ended up hurting these banks over the long term and why depositors continue to have faith in PSBs, despite their high number of bad loans. He also deals with actual crises as to how and why they occurred. Any reader with a little flair for economics and with basic math would enjoy the read.

The basic business model of a bank involves taking money in the form of a deposit from people and paying a certain rate of interest on it to the depositors. The bank then lends out that money at a higher rate of interest. If the money lent out by the bank is not repaid, it becomes difficult for the bank to repay its depositors. If these unpaid loans accumulate over a period of time they become Non-Performing Assets (NPAs) and threaten the very existence of the Bank. The fate of the depositors can only be imagined! Banks, however, won’t operate in a vacuum and are vulnerable to the influences of the political milieu they operate in, such as their nationalization or regulatory directions. Mr. Kaul explains how the PSBs have reached their present pathetic state of ballooned NPAs.

Hyman Minsky’s “Financial Instability Hypothesis” is used to explain the present banking crisis. The basic premise of the financial instability hypothesis is that when times are good and people have seen a period of healthy economic growth, they want to take on more risk assuming that the growth will go on forever. Banks are willing to give riskier loans than they would usually do. Businessmen also want to take on more risk and expand their enterprises and are happy to borrow more. This leads to increased investment in the economy and is supposed to lead to higher profits for businesses in the years to come. Initially, banks only lend to businesses that are expected to generate enough cash to repay their loans. But as time progresses, the competition between lenders increases, and caution is thrown to the winds. An era of easy money is unleashed and money is doled out without discretion leading to unintended and unpleasant consequences. The borrowers who were paying the principal and interest comfortably would end up requiring a loan to repay the loan, a Ponzi arrangement. Minsky’s hypothesis was used to explain the 2008 financial crisis and was used by RBI to explain the NPA crisis of the Indian banking system.

He goes on to explain how the banks were kicking the can down the road by restructuring/evergreening the loans just to avoid recognizing them as NPAs and how the RBI looked the other way by their forbearance policy precipitated the NPA crisis, how Raghuram Rajan’s asset quality inspection drive forced the banks to get the loans on their books and how the government recapitalized these banks with tax payer’s money. He has covered exhaustively all the aspects of the banking sector including fraudulent methods used to milk the banks, regulatory deficiencies, genuine problems faced by the industry in terms of approvals, clearances, etc, crony capitalism, political interference, and plain corruption in the system. He discusses reports of various committees commissioned, such as the ones headed by Narasimhan and Nayak, to study the reforms required in the banking sector.

He ends the book with a quote from Minsky which essentially says that the period of stability should not lead to instability and indiscriminate lending that happens in a period of stability should be stopped. But who has to heed his sane advice? Neither the politicians who are more concerned about the upcoming election nor the bureaucrats who are interested in protecting their turf have any incentive to take a call in the interest of the taxpayer. He ends the book with a rather dim note that the next bad money crisis will happen sooner rather than later and as has been the case this time around, we, the taxpayers, will bear the burden of the next crisis as well.

There is an adage in Telugu which translates roughly as “Never mind you lost your property in a legal battle, now you know the Law after all”. If your banker closes the shop tomorrow and your hard-earned deposits vanish into thin air, you know how exactly it happened! Frankly, “Bad Money” makes you slightly nervous. Reading it you are aware of how jinxed the system is. Without exception, everyone, the reader and Mr. Kaul included has to be a part of the country’s financial system with no control over its functioning. Even following a few suggestions by Mr. Kaul, one can’t escape being a player either as a depositor or an investor. An individual is a helpless witness to the decisions being taken to grant loans of thousands of crores which in all probability may turn bad. He has no say when Govt recapitalizes banks with taxpayer money to repeat the loan cycle all over again. But then, it is a reality you have to live with hoping against false hope that you will not be the next person to be restrained from drawing money from your savings bank account!

That said, it is always a good idea to be aware and be a part of a larger scheme of building up public opinion. In that sense, Mr. Kaul should be complimented for taking up the task of making people aware of the goings on in the banking system. At an individual level, it cautions you to be alert and aware. And finally, If, the reforms initiated in Rajan’s time are any indication, there is reason to believe that things will improve, slowly though!

[Vikash Anand]

Bad Money: Inside the NPA Mess by Vivek Kaul is an insightful book about the fault lines of Indian banking system that resulted into problems of massive Non-Performing Assets or bad loans in India. The majority of the bad loans i.e. three-fourth were with the Public Sector Banks (PSBs), and it is mainly due to defaults by corporate borrowers/industries. By March 2018, the total bad loans of PSBs were at Rs 8,95,601 crore forming 86.4 % of the bad loans of the Indian banking system, which stood at Rs 10,36,187 crore.
The biggest defaulters are Bhusan Steel, Essar Steel, Alok Industries. The bad loans rate of Indian banks when it comes to retail lending has been around 2 per cent for a while.

Fault lines in the banking system

The nationalization of private banks in 1969 and 1980 was undertaken with the presumption that banks would lend & operate with much more social obligation rather than serving the interest of corporate borrowers. The nationalization of private banks gave the Government/politicians almost total control over the banking system. The management of the banks turned much more political/social with political considerations & external favors rather than as a business with professional management . It all resulted into problems of corporate governance in PSBs

During 1980s, organizing loan melas and disbursing loans with political consideration of capturing votes became the order of the day. Loans to corporates/business were sanctioned with favours and external pressures rather than analyzing the creditworthiness of the borrower. The loan melas became a part of the priority-sector lending, which the government wanted the PSBs to carry out. It destroyed the credit culture in India, resulting into massive bad loans by PSBs.

The decade of easy lending

The corporates/industries started taking massive amount of loans in the year 2003 to 2008 to expand its business as the Indian economy was doing very well. The assumption was that the economy would continue to do well. The financial crisis of 2008 disrupted the global economy. Even after the financial crisis of 2008, Public Sector Banks were encouraged to lend by the government to boost the Indian economy. Things started taking a turn from over-optimism to pessimism in the year 2011. Corporates had over borrowed and banks had over-lend.

The corporates had borrowed on the assumption that they would be able to expand the business and earn more. This over optimism turned sour, as the projects did not start on time due to multiple reasons viz. lack of environmental clearance, land acquisition related issues. Sectors like steel, power,telecom turned negative. There was overproduction of steel, overcapacity investment in the power sector, particularly in thermal power. Thermal power plants needed coal. Coal India, the major coal producer was not able to supply the required coal. The business plan of steel companies, power companies with lots of leverage got disrupted. They were not in position to serve the interest and repay the loan. Banks i.e. PSBs were happy to restructure the loan in the hope that their business would recover in the years to come. The non-viable restructuring were undertaken without due diligence delaying the recognization of NPAs . The timely recognization of NPAs would have signaled the banking sector to take measured steps towards lending.

Asset Quality Review of Banks

Things started changing around 2015 as a result of Asset Quality Review of banks launched by Reserve Bank of India. The Asset Quality Review forced banks to classify bad loans as NPA. The easy restructuring of loans to postpone the recognition of NPA was no longer available. The problems as a result of over lending started bursting in the form of massive bad loans. Majority of the bad loans came out of lending by PSBs. The bad loans of PSBs resulted into huge losses and the only way the banks could survive was through Government recapitalization. Government invested about Rs. 3 lakh crore in the banks to keep them going on. This money could have been used in infrastructure creation or some development works by the Government.

Disruption of the market signal

In a economy with banking services by private banks, NPAs would have signaled the market and depositors to move their deposit from weak banks with high NPAs to strong banks with low NPAs. The nationalization of banks essentially provided an explicit guarantee to depositors that all obligations of PSBs would be fulfilled by the Indian government in the event of a failure. Depositors have very high faith in PSBs. The large proportion of depositors continue maintaining their deposits even if the bank is performing very poorly in terms of NPA. Some PSBs had NPA of more than 20%, and it had almost negligible impact on the deposits. The government ownership of the banks kept the faith of general public in the banks and the signal to the overall market about bad business by PSBs were disrupted. The creative disruption of banks through mergers, acquisitions that could have taken place in a market based economy were disrupted that could have resulted into efficient allocation of deposits & resources in the economy.

Bad Money: Inside the NPA Mess by Vivek Kaul is a fascinating book to understand the Indian economy and the status of banking in India. The book is written in a very simple easy to understand language.

[Navya Sri · Rating 4 out of 5]

🏦Thanks to poster boy, King of Good times- Vijay Mallya and diamond merchant-Nirav Modi, who have made the term NPA, reach many with the media attention. Over the period the non-performing assets of banks reached over 8 lakh crores, with unearthing of various frauds, the amount tends to go up.

🏦Then what does this has to do with money becoming bad ? As such this amount of loans instead of becoming default could have been used for the purpose it was taken for, like in the construction of infrastructure which amounts to increase in employment, income which would eventually increase the country's GDP (another popular term). But as it being ended up wasted,  all this money has been turned bad to the financial system.

🏦Bad money explains those popular nuances of how money has turned from good to bad. Instead we think of money is just a money, so what difference does it makes. Yes, it does !!

🏦The book is divided into two parts. Part one gives us the back-end history of Indian Banking system, which makes life easy in order to understand the crisis financial system is facing. The history is essentially about establishment of SBI, a weave of link between economy and politics, balance of payment crisis of 1990's,  scam of 1992, detailed history of functioning of public-sector banks. This is like any other academic book on economy which has many key words like repo rate, interest cut, recapitalization, nationalization, inflation, capital-output ratio etc.

🏦Mr. Kaul goes a little further and explains how the logic of cut in interest rates and repo rate would affect bank deposits, and how the economists and mainstream experts misses around this little concept of second-order effect of cuts in rates . Miss-management of stock market (Harshad Mehta Scam), easy lending, over-autonomy, over-projection of data in bank books have all  contributed to the bad money in the system.

🏦Part-II deals with actual crisis that led to bad money. How populist loans ended up defaults? Takes on role of crony-capitalists.  How defaulters escapes the consequences, what happens if power takes over knowledge? lapses in due-diligence? Role of third party credit rating agencies? role of steel in adding further burden, what did RBI do to move these loans?

🏦This book  is published in 2020, with the data of 2018 and is 320 pages long. Throughout the book, the text is being supported by valid data. The idea of this book is to explain the current mess of non-performing assets in Indian financial system in simple language and explain  what really happened in accumulation of such bad loans.  This goes into very minute details in explaining of how did the situation come at our door-steps of banks. This essays are long read and requires the maximum attention in order to get the bigger picture of how bad money affects our day-to-day life.

🏦Indian banks with attitude of giving loans to identifier personalities alongside structural dysfunctionalities and mounting to huge NPA's( non-performing assets).  

[Gopal · Rating 5 out of 5]

Brilliant book. Very accessible. Well shaped. Starts from historical perspective on nationalization and how the lack of incentives/penalties in public sector, along with an unimpeachable Govt control has led to irresponsible lending and consequent defaults. Public sector banks lack both motivation and capability to evaluate the borrower creditworthiness properly. And in addition, the recapitalization system for public sector has shielded them from facing full brunt of the egregious lending decisions, sometimes openly speculating with depositors money or defrauding them as in case of PNB. Private banks are liable for their shortcomings, public banks aren't. And the legal system isn't flexible or sensible enough to judiciously pursue debt recovery from errant borrowers who rarely feel the pinch after default as banks rarely chastize them.

Additionally a perspective on big sectors in India and how they have panned out in past decade, especially with speculative investments and then plateauing of local or global demand.

Brilliant brilliant book.

Perhaps one aspect that could be further explored is - instead of squarely blaming political-corporate nexus, the book could delve into specific instances where it happened, and lenders actions on recovery front there, along with courts ruling, if any. Also, the book doesn't delve into the positive aspects of public sector banks i.e. that govt can make benefits available to the lowest in the pecking order through public sector banks only. It can be argued that public good doesn't need to necessarily come from govt ownership of large banks, as separate vehicles can be made for such schemes and private sector can be incentivized for logistical support. Even so, detail on that perspective is missing and can help get the other side of the story too.

[Himanshu Modi · Rating 4 out of 5]

Banking in india, especially the PSB sector, has always been a mystery. Every interaction with Bank of India was so convoluted, that it hurt my head as a customer. I just sort of felt like it is a bit of a black box that I best not open.

But when I heard Vivek Kaul’s views on one of the NewsLaundry podcasts, I felt like he might have a good explainer on the whole deal. So picked up this book.

And yep, I should not have opened that box.

Like really, I ended this book thinking it really is best to put money in a trunk and keep it in the house. One of these days the banks peddling bad money are going to create such a tsunami of economic problems, that as a customer, even if you have kept your deposits with a “good” bank, your money is going to be worth a pile of dog poo. I mean, really we shouldn’t be going down rabbit holes of bonds, and heaven forbid, crypto, till the fundamental project financing elements are not sorted.

So, a great book then. Gives a very good sense of what public sector banking is all about.

But… I must say it goes about it in a very haphazard manner. While I was able to follow everything, I felt like it could have been structured better. Also, I was numb very quickly to the numbers being thrown about. I fully appreciate numbers, but it felt like the Kaul kept introducing new metrics for the heck of it with the messsage being, every which way you look at it, PSBs are shit at managing loans.

The much bigger takeaways are what the r RBI and government have tried, and ought to try going forward. It’s a great lesson. Something. Which popular macro economics doesn’t seem to talk about too much. And really we ought to.

I will probably read other books by Kaul. He comes across as someone who does some incredibly detailed root cause analysis. Something I really appreciate as a reader.

[Shaheen · Rating 5 out of 5]

Vivek Kaul scores again, and How!

Kafka said; “Don't bend; don't water it down; don't edit your own soul according to the fashion. Rather, follow your most intense obsessions mercilessly." And that is exactly what Kaul does with his new book; “Bad Money"!

"Bad Money" could not have come at a more opportune time than now, when we are seeing many a banks going under and many others appearing to share the same fate! And all this while the common man tries to grapple with the concept of ‘Crony Capitalism’.

Kaul presents his case backed by facts and figures without being judgmental. The ‘Chronology’ is there but Kaul is not ‘explaining’ it and leaves it to the reader to arrive at his own conclusion.

My conclusion after reading the book is ‘ Hammam mein sabhi nange hain’…and if one has to have malice it has to be towards all. There is a lot one can learn from the sins of the past but as we have seen so often, the bane of our country has been that we learn from history that we learn nothing from it!

Trust Kaul to write for ‘the last man in the line’; and that is what makes his writing so easy to comprehend, assimilate and absorb.

Like his earlier books, he does not disappoint the reader with his latest endeavor either. Unlike most books on finance and banking which at times can be extremely dry and boring for the common reader, Kaul keeps the narrative in Bad Money very simple yet engrossing, which keeps the reader’s interest alive, throughout!

A must read!

[Ashley Tews · Rating 4 out of 5]

I am not really a reviews person. I don’t think I have ever written a review on anything I bought on Amazon or any e-commerce platform, but this book made me write one. Understanding the NPA mess in the Indian banking system, for someone like me, who’s got a Masters degree in Finance and a career in Finance, was still a mess. This book simply showcases the quality of understanding that Vivek has on the subject. Excellent book. Touches upon so many topics from Nirav Modi to Brij Bhushan Singal, FD habits of Indians to the ineffectiveness of RBI rate cuts, it is a masterpiece. Whether you want to know the history of the banking system in India or you want to know various policy measures put forward by different governors and Finance ministers to tackle various issues, this book is a go-to solution. Even a layman would understand how we got into this mess and why we are not getting out of it. It should be a MUST read for young employees joining PSBs as probationary officers. The author, unlike others, doesn’t try to rub his opinions on the face of his readers, instead, he has put all the research he’s done in front of the readers in terms of data and information. An excellent piece and a very interesting read. I had bought a Kindle version initially but then realized it had too many important points, so I bought a hardcover, which is convenient for me to highlight and stick notes. Every penny spent on this book was worth it.

[Pankaj · Rating 3 out of 5]

Vivek Kaul, as has been pointed out by several readers, is a respected finance specialist reporting on his area of expertise.

This collection of statistics, graphs and his laser-sharp analyses and well-articulated commentary bring to the fore all that ails the world of Indian (Public Sector largely, but increasingly now, other) Banks. Crony-capitalism, political interference, greed (personal/corporate) and an eye out for short-term gains contribute to the Bad Money that Mr. Kaul has written about. Neither the source of the problems nor the solutions suggested by several quoted experts, including the author, are recent or likely to be implemented any time soon. Political expediency is only one factor, individual/national character is, I believe, a bigger issue that needs to be addressed and ameliorated; therein lis the challenge! "Chalta hai" and "Ki farak painda hai?" contribute to our collective mindset that draws comfort from laissez faire.

Deserving of a higher rating, I held back only because the author starts to lose the (layperson) reader with a surfeit of details and the tedium of repetition and history. Still, worth a read.

[Karan · Rating 4 out of 5]

The book is about a mess in Public sector banking. To explain this the book talks about history of banking in India. How 2008 crisis created growth story for India. Where interest cost was low, and businesses went on borrowing spree. Coal scam halted that dream run. Then the rise and fall of steel pricing and how these 2 events affected the slowdown in India.

As a taxpayers of this country its definately an interesting read. Its good to know what all happens in PSB, and how it affects us directly nd indirectly. because these PSBs have been recording massive NPA’s and hiding even more of it. This hole is filled by taxpayers. Raghuram Rajan during his tenure brought some good policies to keep balance and checks in PSB. But unfortunately these have been diluted over the years. Its in the best interest of the country that these PSB should be privatised by reducing governemnt stake below 51%. Axis bank is a very good example of it.

The book has also throws light on some of the scams like Vijay mallya, Nirav Modi, PNB, PMC. Makes it worth a read.

[Iqbal Sidhu · Rating 4 out of 5]

This is a great layman's book on the banking crisis which has unfolded and continues to unfold in India. From the brash exuberance of the early 2000s when all sorts of economic peaks appeared within reach, to the doldrums of the late 2010s, then a pandemic, and then to the present, when the Indian economic growth has returned to its historical so-called 'Hindu rate of growth' of 3%-4%, India has become a study in caution on what not to do in an economy, and how to stop the economic engine from overheating and then imploding.

Vivek could have written half the sentences he has ended up writing and the book's material would not need to have been altered in any meaningful way, but since he makes it clear in the beginning of the book that he is writing it for everybody to understand, one cannot really hold the over-indulgence in explanations within explanations against him.

Overall, a good read, and a must-read for anyone interested in the sad and sorry tale of Public Sector Banking in India, and the Non Performing Assets (bad & stressed loans) crisis.

[Abhijeet Parida · Rating 5 out of 5]

The book in very simple terms explain the phenomenon and terms associated with the non performing assets of a bank. It does not talk about who are responsible for "frauding" the bank but tells how various government actions has created this problem. the author not only talks about the seen and the unseen effect of policies but also tried to provide better alternatives, albeit in hindsight. Towards the end there is a deep dive into the industry wise explanation of why the borrower are not able to payback their loans and what are policies that help banks combat these non performing assents. All in all a very good book to get a holistic understanding of the problem for both the subject matter as well as an amateur.

[Shantanu Gharpure · Rating 4 out of 5]

This is a fascinating read on the NPA mess. The book went to publishing in Feb 2020, before Covid struck India, and things have only gone downhill since.

We all have at least one story of lunch-time@SBI. India has an intimate relation with its Public Sector Banks (PSBs). PSBs in turn have an intimate relationship with the cronies leading to much of the financial trouble that has ensued.

The book explores the business-politician-bank nexus in this book. It also traces India's bank evolution from almost a 100 years ago. Vivek, in a simple language, manages to convey the most intricate details of the policies and incentives that have driven PSBs to despair.

It is a must read for anyone who wishes to understand the deep financial mess we are in.

[MADHUKAR DAYAL · Rating 5 out of 5]

Though you would need a good understanding of, both, macro and micro economics to grasp and understand this book completely; it is vital for all investors to read it. In particular, I liked the way Vivek Kaul has described the behaviour of Public Sector Banks (PSBs) and the lathargic, not-my-money-to-worry-about attitude of their employees even at the top level. Definitely, a much greater continuous watch, scrutiny, and responsibility needs to be assigned to the roles of the top brass of public sector, as well as, private sector banks. These banks and their top employees' greed, errors and mistakes have played a very very big role in keeping India poor and under developed, as well as, destroyed the reputation of banks in the common person's minds.