Bad loans and NPAs have eaten up a large chunk of Indian Banks. Losses have engulfed the State-run banks. Will a crypto adoption at this juncture help India’s finances get into shape once again?
What went wrong?
As per the data shared by Financial Express, the gross bad loans written-off by Indian Banks by the end of the FY 2017-18 stand over Rs. 9.61 Lakh Crores. Of this, Rs 85,344 crore worth of NPAs were pertinent to agriculture and allied activities and Rs. 7,03,969 crore pertained to industries.
For the uninitiated, an NPA or Non-Performing Asset or Bad Loan refers to an asset which ceases to generate income for bank. Such loans are labeled as NPAs where interests/installments remain overdue for a period of more than 90 days.
The compiled earnings of India’s Public Sector Banks (PSBs) for the first quarter of this year ending March 2018 are also under a suffocating burden of Rs. 44,241 Crores of Net Losses. 13 out of 15 PSU banks that have declared their earnings are under losses, sparing only 2 of them as reported by TOI.
A quick insight into the Q1 losses of the top performers for the FY 2018-19 ending June 2018 –
A State of Losses
Not to overlook the still boiling and controversial Nirav Modi fraud which made Punjab National Bank eat a humble pie costing Rs. 11,400 Crores written-off as bad loan.
And as we move 10 years ahead of the catastrophic Lehman Crisis, completeing a century as on 15th Sept’18, we hear the echoes of the warnings ushered by former RBI Governor – Raghuram Rajan, in the form of a note to the Parliamentary Estimates Committee by the clairvoyant.
Rajan has put India’s prevailing bad loan crisis inside a definite frame of reasons, specifically – over optimistic bankers, slowdown in government’s decision making process and incompetent projects piling heaps of loans over the banks.
Charting the way credit % rocketed.
Bad loans in PSBs rose exponentially by Rs. 6.2 trillion between March 2015 and March 2018
Meanwhile, a look at crisis around the world
Crisis have crippled not only India rather many other emerging markets such as Iran, Turkey and Argentina. Iran’s currency – Rial has lost almost half of its value since the beginning of 2018, currently pegged at 42,000 Iranian Rials against 1 US Dollar!
Inflation rate is as high as 10.8%, heralding destructive economic crisis.
Spending a fortune to buy bread
The figures are in comparison to Jan 2018 data
The current economic conditions in Iran are very similar to that of Greece in 2008, when the latter was experiencing its worst financial crisis, owing $320 billion to its creditors.
By and large the Greek crisis exhilarated due to excessive credit leverages sanctioned by private sector banks which eventually converted into permanent national debt – a situation most prevalent in India since last year.
Herve Falciani, a former HSBC employee, recently unearthed shocking revelations of tax-evasion and money-laundering at one of the largest financial institutions of the world. The reports by Bloomberg suggest that Herve decided to come forward as a whistleblower and anti-fraud activist by leaking HSBC’s data in an effort to ensure “democratized finances” to the people.
What binds them all? – Bitcoin!
If you have also been guessing about what’s the common thread through all the growing breakdowns, then you got it right! It’s Bitcoin – playing along as an underdog!
It seems Bitcoin was already under its way in the run-up to the Greece financial crisis in 2008; Greeks invested a sizeable amount of their leftover wealth in Bitcoin during the crisis. In fact, reports suggest that Greece was one of the first few nations to experience the Bitcoin wave which helped it land safely onshore.
Even during its embryonic years, Bitcoin already had 6 ATMs in Greece itself along with several emerging Bitcoin exchanges. One such exchange, SpectroCoin, also handed Bitcoin Prepaid Cards with “Satoshi Nakamoto” engraved in place of user’s name.
Today Europe has 1/3rd of the world’s total Bitcoin ATMs.
Divided by continents, United by Bitcoin!
The HSBC whistleblower has been awaiting his extradition in Switzerland, where he has been sentenced five-year jail term, amidst which he’s gladly promoting a cryptocurrency named Taboow. His reasons are clear- cryptocurrencies are more democratic and free than most fiat currencies.
“Cryptocurrencies open finance to allow it to expand and not just remain in the hands of the few,” he said in a press release.
Talking about India, the Bitcoin fever has been on its extreme since the past one year, with average weekly native transactions ranging from 100 to 200 Bitcoins as per coin.dance analysis.
Consequently, the node chart for Bitcoins in India has surpassed many emerging nations.
Standing tall at 12
Although India is facing ambiguity over the regulations of the crypto market, industry experts are zealously investing into the underlying technology of Bitcoin, i.e. – Blockchain. Some of the largest Indian Banks are adopting the revolutionary technology for smooth cross-border payments.
Below are some recent instances where India open-heartedly invited Blockchain technology into its systems.
Banking on Bitcoin
Anyone soothsaying about Bitcoin in India?
At the time of writing, nearly 14.87 million Indian Rupee or 31.19 Bitcoins have changed hands during the last 24 hours in lieu of Bitcoin trading as per Crypto Compare analysis; ranking 29th amongst the 155 listed countries. Indians seem to enjoy the jeopardy and volatility game shadowing the crypto market. However, proposed regulatory guidelines and a full swing integration of the booming virtual currency still awaits a mindful thought process.