Why the government’s review of state-owned banks makes sense3 min read 30 Mar 2023, 01:14 PM IST
While the strength of Indian banks’ balance sheets makes SVB-style bank runs unlikely, they aren't completely insulated from rapid interest rate hikes
Indian banks, particularly those owned by the government, aren’t as safe from higher interest rates as the Reserve Bank of India (RBI) would like everyone to believe. Finance minister Nirmala Sitharaman knows this. That’s why the government – the promoter of several banks in India – has been quick to carry out a review of the banks it owns following the collapse of Silicon Valley Bank and a few other banks in the US. That’s not to say there were similar concerns of a run on banks in India, especially those that have the protection of the sovereign.
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