Not a private matter, anymore

Just a month ago, amid the clamour around diamantaire Nirav Modi and the alarm over the mounting non-performing assets (NPAs) of India's public sector banks, the private banking sector offered hope. While the total NPAs, or bad loans, of state-owned banks had touched Rs 7.34 lakh crore as on September 30, 2017, private sector banks together had bad loans amounting to Rs 1.02 lakh crore. While the PSU banks were criticised for inefficiency, corruption and lack of autonomy, which left them vulnerable to political pressure and crony capitalism, the best-known banks in the private sector were seen setting standards in business and operational efficiency, customer centricity and shareholder focus. The CEOs of private banks would routinely steal the limelight at industry events, making their way into 'power lists' and drawing salaries that placed them among the uber-rich. So, when policymakers looked for answers to the crisis in PSU banks, some of them advised that they should be privatised.

Cut to the present. A crisis at ICICI Bank, India's second largest private sector bank with consolidated assets of Rs 10.5 lakh crore as on December 31, 2017, has snowballed and left the country's private banking sector looking just as vulnerable as its state-owned counterparts. What looked like a corporate governance matter in the bank is now being considered as one of the weakest links in the private banking framework. Comparisons are being drawn