Why would they give up the golden goose?

Bad loans in Indian banks will peak at Rs 12-14 trillion, third only to Greece and Italy, said U Kotak, CEO of Kotak Mahindra Bank. That is about 20% of all loans disbursed by banks. Most of the bad loans are in public sector banks. Most frauds apparently take place during economic booms when asset prices soar. India's economy boomed from 2003-08, followed by prolonged fiscal and monetary stimulus to mitigate effects of the subprime crisis, wrote M Chakravarty. In 2007 the economic growth touched 9.8% of GDP. In 1991, when economic liberalisation began, bank lending was 19.2% of GDP, went up to 25% in 2001-02, and then doubled to 51.64% by 2016-17. The growth was in public sector banks, with loans to infrastructure increasing from 1.1% of non-food credit in 1998 to 12.8% in 2017. When the growth rate fell government banks were left holding 68.3% of all bad loans. Managers of public sector banks know that they will not be sacked and that the government will not allow these banks to fail, so they follow government orders to finance large projects, wrote Prof N Kaushal. Bad loans at Indian banks are among the worst in G20 nations and worse than other emerging nations, because of low capital adequacy ratio, wrote T Kundu. Why do frauds happen at public sector banks? Because officials are appointed by other officials of the government, have no incentive to succeed or fear of being punished for failure, and politicians force them to give loans to dodgy businessmen in exchange for campaign finance, wrote Prof S Rajagopalan. The only solution is to privatize them. R Singhal gave a list of failing private banks which were rescued by the government by forcing public sector banks to merge with them to protect depositors from losing their savings. No matter which party comes to power, politicians will never give up control of public sector banks because they can use bank deposits to please their vote bank. The Congress spent Rs 600 billion in farm loans waiver in 2008, to win general elections in 2009, the present BJP government may end up spending up to Rs 3.1 trillion, or $49.1 billion, to try and win state elections this year and general elections next year. Public sector banks are having to support the government's affordable housing scheme by lending money to the poor. Small loans up to Rs 200,000 could turn out to be India's own subprime crisis. Better salaries and proper evaluation of officers before promotion would be a good start to root out corruption in banks, wrote T Bandopadhyay. "Even as the state provides violent support to those who benefit from such predatory capitalism, often violating the human rights of its citizens, particularly its poor, the market begins to function like a bureaucratic machine dominated by big business, and the state begins to function like the market, where everything is available for sale at a price," said the Supreme Court in 2011. Banks are the goose that lay golden eggs. Why would politicians give them up?