If you thought that only banks in the US were going bust in the economic meltdown, think again. As per a business daily, when banks in US were falling like ninepins, some cooperative banks in India were not far behind. In fact, for every five banks going bust in the US, there were two in India that were going belly-up. It may be noted that as many as 19 Indian co-operative banks collapsed in FY09, as against 44 American entities. The newspaper report also states that the RBI’s credit insurance arm had to pay over Rs 1.4 bn to depositors to cover the liabilities of these 19 entities. Under the insurance norms of the Deposit Insurance and Credit Guarantee Corporation, a wholly-owned subsidiary of the RBI, a maximum of Rs 1 lakh is paid to a depositor in case his bank becomes insolvent.
It is important to look at the holistic picture and have an individual opinion rather than get swayed away by the public consensus. This is the view of the man who pioneered the retailing boom in India - Mr. Kishore Biyani, the founder of India’s largest retailing company - Pantaloon. In an article in the Wall street Journal, Mr. Biyani wrote, "Almost daily doses of bad news on television screens and newspapers have possibly done as much damage to the economy as the events on either side of the Atlantic." I completely agree with him. Mr. Biyani’s predicament is based on the fact that an overwhelming majority of Indian consumers are self-employed, who can neither get laid off nor can have pay cuts. Consider some statistics he has provided. The share of the national income represented by proprietor-run concerns and partnerships is 35%. The share of companies is around 15%, government around 25%, and agriculture around 25%. Combine agriculture and the self-employed in industry a...
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