India’s Bad Banks

There was a report on the losses our Public Sector Banks (PSB) have made in the financial 2017-18. It was a staggering 87000 crores. Almost all of the stimulus given by the Government to clean the bank balance sheets have gone into thin air.

The above image shows 19 out of 21 banks have reported losses. Indian Bank outshines the crowd followed by Vijaya Bank, the only 2 that are profitable. Indian Bank was once into big trouble, change in management and restructuring on a swift note changed the fate of the bank. Later it has not looked back.

Now, it is time for all the other banks to change. Hopefully it is around the corner. As most of the bad loans are cleared off, of the books which have been made possible by the introduction of the Indian Bankruptcy Code.

Soon we are likely to see big growth coming these poor performers, hard lessons learnt which should not repeat. Probably another quarter or two more and it will be good time to add banking stocks to your portfolio. Even in mutual funds, investing into schemes which are increasing exposure to PSB’s by beginning 2019 will pay rich returns.