The first Budget of the NDA Government 2.0 will be presented on July 5 by Finance Minister Nirmala Sitharaman. The banking and financial sector is in dire need of reforms. Over the past four to five years, the dismal state of affairs at banks has impacted investment activity and the economy at large, and needs special attention from the government.
Bad loans have risen from 4 per cent in FY14 to 12-13 per cent now — many public sector banks (PSBs) have, over the past few years, incurred huge losses and the capital erosion has impeded growth.
To add to the weak banking system, many non-banking financial companies (NBFCs) are in trouble too. NBFCs have been playing a vital role in filling the void in meeting credit demand. But, after the Infrastructure Leasing and Financial Services (ILFS) crisis, the NBFC sector too is caught in a liquidity crisis. In this video, Senior Deputy Editor Radhika Merwin explains what is ailing the banking sector and what revival measures are expected from the upcoming Union Budget.