Who Wants To Be A Banker?

The change in the economy will surely help, but a big worry for banks continues to be the dud-loan issue.

- Raghu Mohan

A Banker is a fellow who lends you his umbrella when it’s sunny and wants it back when it rains”. Mark Twain, the American author and humourist’s pithy observation suggests bankers are an irrational, mercurial tribe. Not really! It’s perfectly sensible for you — banker or not — to want your umbrella back when it starts to pour.

For some time now, bankers have been out to do so; they have been wet and out in the cold for far too long that some suffer from a bad bout of pneumonia. There’s only one way to describe fiscal 2015 for them — annus horribilis. The expression is in Latin, but what was spoken between bankers and India Inc., for the most part, was Greek to both. We will come to it in a bit, but first: the quicksand banks were caught in the fiscal gone by (and will continue to be in for a while).

Bank balance sheets shrunk, a trend that’s been on since 2011-12. On the credit side, it was reflective of the fall in industrial growth, poor earnings reported by clients, a flight to safety on the part of banks given the uptick in dud-loans and governance concerns. If you were to look at it bank-group wise, state-run banks did not grow their books, but private and a few foreign banks (the stable among the full-service players and a few niche, wholesale players among them) did show an appetite for credit — on a selective basis that is. At the industry level, it’s what state-run banks do or don’t that matters — they account for 76 per cent of the business.