In a lecture at SGTB Khalsa College, Subramanian said “not too many” banks are needed and 5-7 public sector and private sector banks are needed to create a healthy banking structure. He attributed the twin balance sheet problem to the problem of exit and more cases of public sector banks-to-private sector lending, saying that in future, the country should have more private sector-to-private sector lending. “We had public sector banks lending to private sector firms, especially in infrastructure. Once that happens, in a sense, the government has to bail out the public sector banks, which benefits the private sector and often the rich private sector. So, this public sector to private sector lending has proved toxic in India.

Source: Indian Express October 25, 2017 20:15 UTC