How many Lehman Brothers do we have?

It was the collapse of Lehman Brothers in the US that taught us a new lexicon of words - toxic assets, credit default swaps, subprime mortgages, all to describe different types of bad loans. Indians were smug at that time because our banks are strictly controlled and not allowed to play with weird financial instruments. Trouble is that the strict rules are for private and foreign banks but not for public sector banks which are much larger and majority owned by the government which means that politicians can force banks to lend vast sums for political reasons, without adequate safeguards. Today the Congress is not so powerful as to organise loan melas, as it did in the past, where bundles of notes, raided from PSU banks, were distributed to the poor. Today the robbery is disguised as " inclusive growth " and given fancy names such as NREGA scheme and Backward Regions Grant designed to distribute money to win elections. The largest PSU bank in India, the State Bank of India has reported that its Non Performing and restructured assets have gone up from Rs 28.38 billion in December 2012 to Rs 86.69 billion on 31 March 2013 which is 7.73% of total advances. This apparently means that NPAs which have not been provided for account for more than half of the net worth of SBI. Livemint, 27 May. Which is equivalent to writing down its value by half. In the case of many PSU banks the NPAs without provision are more than the total net worth of the bank. A Parliamentary Standing Committee reported that more than Rs 830 billion worth of corporate loans had turned bad in the last year and a half. Between March 2011 and December 2012 NPAs increased by 190%. Also it is not specific companies in trouble but entire sectors. Real estate, power, infrastructure and steel account for 85% of NPAs. We know why. While Congress fellows were swanking around in Davos drunk with false hubris they allowed a huge bubble to build up in properties leading to uncontrolled increase in black money and skyrocketing inflation. Coal mines were distributed to friends and relatives who waited to offload them at a higher price so now we are having to buy from abroad. Roads and airports projects were awarded at a premium leading to losses and very high tolls and airport taxes. In a classical Catch 22 situation unless these sectors improve the economy cannot grow and unless growth in the economy picks up these sectors cannot grow. Of course, PSU banks can always be recapitalised by printing money, but that will cause the rupee to fall. Which is happening even now. The US had only one Lehman. We are so lucky.