OVERDRAFT: Saving the Indian Saver by Urjit Patel

All of us love to spend. But before we can do that, we have to have earned or saved some money. Only sovereigns don’t have to: they can print money, or borrow; in our country, where they own banks, they can use our deposits to lend and splurge for goals that may not always be economic in nature.

ABOUT THE BOOK

Sometime in 2015, news of unsustainable bad debts (nonperforming assets or NPAs) in the Indian banking sector started to first trickle out, and then became a flood. In the forefront were some of India’s largest government banks, and a series of tycoons who were running their empires on unpaid debts. The banks’ problems landed on the table of Urjit Patel when he became Governor of Reserve Bank of India in September 2016. Based on thirty years of macroeconomic experience, he worked out the ‘ 9R’ strategy which would save our savings, rescue our banks and protect them from unscrupulous racketeers. In this book, he explains the problem and how it blew up; and how he would have resolved it if he had not been prevented.

The government is responsible for ensuring adequate capital for banks that are under its ambit on a

urable/sustainable basis. The dominant owner pre-2014 didn’t question risk controls in government banks even as it received significant dividends. Several government banks did not have senior management in place, and governance suffered. This is a perennial shortcoming on account of bureaucratic inertia and political meddling…