Will technology help us escape their clutches?

"Finance Minister Nirmala Sitharaman on Friday said banks cannot refuse credit to MSMEs under the emergency credit facility and any refusal should be reported." The minister also said the Finance Ministry is working with the Reserve Bank of India on the extension of loan moratorium or a restructuring scheme for the hospitality industry." But, already, "A Reserve Bank of India (RBI) stress test on banks indicates that gross non performing asset (GNPA) ratio of all banks may increase from 8.5% in March 2020 to 12.5% by March 2021 due to the sharp slowdown in the economy as a result of the lockdown imposed to fight the Covid19 pandemic." The RBI releases its report on stress tests for banks twice a year, in June and December, wrote Vivek Kaul. In March 2015, the RBI forecast NPAs would reach Rs 4.5 trillion under 'severe stress' scenario "when all hell breaks loose, with growth collapsing and interest rates shooting up". "By March 2018, the total NPAs stood at Rs 10.36 trillion." Former Chief Economic Adviser Arvind Subramanian worte, "We know in our bones that the amount of stressed assets is always and everywhere at least 20-25% more than what people believe and what RBI claims." "India is witnessing the return of a worrying trend for greater tolerance for loose lending and provisioning practices, which risks putting it on the same path that took Japan to the 'lost decade' in the 1990s, former central banker Viral Acharya said," wrote Anirban Nag. We should be so lucky. In 1980, Japan had a GDP of over $1 trillion, while India's GDP was less than one-fifth that of Japan at $189.5 billion. The gap between the two nations has narrowed due to Japan's lost decade when it fell into a liquidity trap, but Japan's GDP is still at least 2.5 times that of ours, with a fraction of the population. Japan's GDP per capita was $40,365 in 2019, compared to our per capita GDP at $2169. Bad loans of our banks was first pointed out by Ashish Gupta. "Ashish Gupta is surprised that not a single Indian billionaire sued him in the last decade. In his 2012 'House of Debt' report for Credit Suisse Group AG gave investors an early warning about the dangerous levels of the delinquent borrowing by many of India's top business groups." Former Governor of RBI Prof Raghuram Rajan suspects that "A lot of damage wreaked on the corporate sector by the lockdown will be uncovered", meaning "many firms may default on paying back their loans". "The RBI has been diluting some of the toughest measures prescribed for financial stability and its surplus liquidity policy has weakened inflation-targeting and shifted the goalpost, former deputy governor Viral Acharya has said." The government must put more capital into public sector (PSU) banks. "The problem with recapitalisation of PSU banks is the lack of fiscal discipline," said Prof Acharya. "You want to own, but your don't want them to be a burden on the exchequer. These are incompatible." Instead the government wants to pass a Financial Resolution and Deposit Insurance (FRDI) Bill which insure a paltry Rs 500,000 of people's deposits if a bank collapses. "There has been a growing interest in  cryptocurrencies since Bitcoin captured the imagination of people," wrote Karan Bhasin. Naturally, the RBI banned them but the Supreme Court overturned the ban. People hate repression. Technology will help.