This Adam Smith quote sums up the role of the banking sector in the economy. "It is not by augmenting the capital of the country, but by rendering a greater part of that capital active and productive than would otherwise be so, that the most judicious operations of banking can increase the industry of the country."
Contrast this with a recent comment by the beleaguered United Bank of India's executive director, Sanjay Arya to a newspaper. "The bank's exposure to state-sponsored schemes has increased from Rs 500 crore to Rs 1,500 crore. And recovery from these sectors is a challenge because of political interference."
The difference between the two tells us the plight of a public sector banker. Using public sector banks (PSU) to promote government's agenda can be considered ok, but then the government should be able to recapitalise them as well.
Text: Joydeep Ghosh and Clifford Alvares, Business Standard
Images Courtesy: Reuters