The Public Sector Unit (PSU) banks are under Non Performing Assets (NPA) Mountain.
Reserve Bank of India (RBI) noted:
"Macro-stress tests indicate that under the baseline scenario
of current macroeconomic outlook, SCBs' (scheduled commercial banks) GNPA ratio
may rise from 11.6 per cent in March 2018 to 12.2 per cent by March 2019”.
In this back drop of NPA and India’s future economic growth, even
if NPA is resolved and banks are well capitalized by Government (Citizen)
funding, following is inevitable post 2020:
·
Private Equity players will increase in India.
·
More MBA’s from IIM and other management institutes will work with
PE
·
More growth to McKinsey and other management consultants (check
video link):
I believe the Private Equity play will start in a big way post
April 2020.
Let’s see the latest position in India:
Economic times article states “Private Equity industry in
India: Bigger, bolder, better, brighter”.
Mint states "The private equity sector has seen robust growth in 2017 with
average deal size doubling in the year although deal volume declined."
One of the biggest lie will be the contribution of Private Equity
to the Indian Economy and towards job creation.
Proof: McKinsey Report Indian Private Equity “Route to
Resurgence” June 2015.
The executive summary states the following benefits:
·
Stronger job creation record
·
Superior financial performance.
·
Greater export earnings
·
More acquisitive and global
·
Better corporate governance and higher tax contribution
To have a proper picture of what Private Equity does please watch
the below video:
Eminent financial authors have spoken how Private Equity players
are reason for:
·
Higher debts
·
Commission based working
·
Job Loss
May be in coming months there will be great articles written
praising role of Private Equity in India and its benefits. But this will be a
ground work for the future NPA's. May be then the ones who will be struck will
be Private Banks.
Mistakes to be avoided:
·
Creation of Bad Banks
·
Handing over of PSU banks to Private
India and
Indians better be careful.
Source:
McKinsey Report:
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