PNB scam and NPA crisis: Are we looking at a long-term bear market?

Food inflation softened, but higher crude prices almost balanced that out. Bond yields have already moved up, while poor balance sheets impede banks' ability to lend

The Rs 14 billion scam at Punjab National Bank (PNB) has dominated headlines and shaped sentiment through the last week. Nobody is clear as to what the final damage across the banking system would be, since we don’t yet know which banks are exposed to the Letter of Undertakings (LoUs). There is some political fallout and there could be more, given the absconding jewellers’ connections with the high-and-mighty.

It’s no secret that Indian banking is in dreadful shape. The Q3 results indicate that losses, as well as Non Performing Assets (NPAs), are still rising. PNB was one of five PSU banks