THE ROAD TO RECOVERY

SOME OF INDIA’S MID-SIZED PRIVATE BANKS, ONCE THE DARLING OF STOCK MARKET INVESTORS, ARE STRUGGLING IN THE MARKET CAP RANKINGS. HOW DO THEY PLAN TO REGAIN THEIR LOST GLORY?

- ANAND ADHIKARI

“BANKING IS VERY good business if you don’t do anything dumb,” advised fabled investor Warren Buffett, who knows a thing or two about making money in the stock market. Yet, history is laced with innumerable anecdotes of banks’ dumbness and their eventual fading into obscurity. Globally, hundreds of banks failed after the global financial crisis as they took risky bets in subprime customers. More recently, three Indian banks—PMC Bank, YES Bank and Lakshmi Vilas Bank—went belly up as their corporate borrowers defaulted on loans. In the banking business, it doesn’t require rocket science to mobilise low-cost public deposits, write loans to retail and corporate borrowers, grow the loan book, and earn interest for customers as well as shareholders. But banks have often thrown conservatism out of the window and embraced high growth to build scale in the fastest possible time.