The Indian banking sector continues to face challenging times. The number of bad loans is rising unchecked, placing immense strain on banks’ profitability and growth. On the other hand, high-profile banking frauds have put the spotlight on the gaps in banks’ risk management processes.
The recently announced results for financial year 2018 reflect the turmoil the country's banking sector is going through. Nineteen of India’s 21 state-owned public sector banks, which account for about 70% of the banking sector’s assets, reported losses both in the fourth quarter of the 2018 financial year, and for the whole financial year itself. Private sector lenders are also under stress, with Axis Bank, India's third largest private sector bank, reporting its first quarterly loss in the fourth quarter of the 2018 fiscal year. Overall, the banking sector made a net loss of Rs463bn ($7.1bn) in financial year 2018, compared with a net profit of Rs350bn during the previous financial year.
