India's public sector banks are suffering from high non-performing assets and poor capitalisation. The government is considering privatisation as a way to revamp these lenders – starting with IDBI Bank – but is this the right solution? Rekha Gupta Menon investigates.

With a newly acquired banking licence and a vast national network, India Post has huge potential to boost financial inclusion in the country. However, as industry experts point out, much will rest on it getting the fundamentals – the technology, management and expertise – in place. Rekha Gupta Menon reports.

In the past 12 months, Indian banks have finally uncovered the full extent of their stressed assets. And for the first time, the Reserve Bank of India has given local lenders a framework to identify and deal with loans of concern. Rekha Gupta Menon explores how these stressed assets have hit Indian banks' profitability, and which lenders have performed better than others and why. 

With state funding on the decline, and new technologies and more stringent regulation both increasing, the Indian banking sector is undergoing a significant period of change. New players are entering the market, making it even more difficult for the state-owned banks, which are already struggling with deteriorating asset quality and incoming capital adequacy targets.

The Indian government may be keen for consolidation in the banking sector – driven by a desire to see the country's lenders figure among the world's largest banks – but internal resistance to such changes, from bank employees and their unions in particular, continue to thwart such activity. On top of this, India's lenders are struggling with non-performing assets, which has proved a blight on their profits over the past 12 months.  

Critics have long argued that the obstacles preventing further growth in the Indian banking sector – particularly among its state-owned institutions – can be eliminated by a couple of deft policy changes. The question is, will the country's new government bring about the financial sector reforms that are so badly needed?

Two new players have been admitted into the Indian banking sector in 2014, but declining profitability among the country's existing lenders in the past 12 months does not appear to be inspiring much confidence in the industry. The Banker talks to chief executives at both established and new institutions, and discusses past performance and future plans.