Two steps back: Why govt's withdrawal of FRDI bill is a missed opportunity

What the Bankruptcy Code passed last year does for companies, the FRDI bill would have done for banks

India needs a strategy to get the government out of banking. Non-performing loans among state-owned banks -- a legacy of India’s socialist past which account for nearly 70 per cent of deposits -- have crossed 5 per cent of GDP. The central bank has restricted lending at 11 of them and forced one, IDBI Bank Ltd., to sell itself to the government-owned Life Insurance Corporation of India.

State banks have repeatedly been a burden on the exchequer and will almost certainly continue to be so. The great need is to increase the number and size of private banks, which have