Bank on this transition

With provisions peaking and rising hopes of an economic recovery, banks may be a good parking lot for patient investors

Saddled with bad loans, Indian public sector banks have been posting weak results over the past five years. Deteriorating asset quality and higher provisioning had clipped their wings. Profitability was dented, and capital erosion meant that the power to lend was stifled. Barring the retail-oriented private sector banks such as HDFC Bank, every large corporate bank — public and private — was struggling amid a stagnation of private investment. And just as the NDA government takes over once again, economic growth has hit a 20-quarter low of 5.8% in March 2019.