Q.3 What are the reasons for the high prevalence of scams in the banking industry in India? What are the implications of such scams for the economy? Suggest the way forward. (10 Marks)

Mentor’s comment-
  • https://www.thehindu.com/opinion/op-ed/the-scam-faultline-is-damaging-indian-banking/article65628245.ece
  • In the intro, mention that the RBI’s Financial Stability Report released in December 2021 projects the rise of gross NPA to 8.1% in Sept, 2022.
  • In the body, mention the reasons for the scams such as poor lending practices and inside work, involvement of junior and mid-level management, insufficient due diligence etc. In the implications mention the impact on every persons of the country, weakening of the market, reduced investment in the economy etc. In the suggestions mention tightening of internal and external audit systems of banks, fast rotation of employees of the loan department of the banks, setting up of internal rating agency by the public sector banks, implementing effective Management Information System, use of AI etc.
  • Conclude by mentioning that while the Government of India and the RBI have taken several measures to try and resolve the issue of scams in the banking industry, there is still a long way to go.
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chandan mahabaliah
chandan mahabaliah
1 month ago

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Pranav Shirke
Pranav Shirke
1 month ago

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Apurva Bomble
Apurva Bomble
1 month ago

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believing is seeing
28 days ago

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