Of banks and bureaucrats

BANKS are usually reliable barometers of the health of the economies they help finance. So news in recent days that India’s lenders have lost over 200 billion rupees ($3 billion) in the most recent quarter sits oddly with zippy growth in GDP of 7.9%. A revving economy may help the banks overcome their weakness. Far likelier is the opposite outcome: that the Indian economy ends up being damaged by its lenders.Most of the trouble lies in India’s state-owned banks, a network of 27 listed but government-controlled entities that account for 70% of India’s banking system by assets (see ). Their share prices have tumbled ever since the Reserve Bank of India (RBI), the central bank and regulator, sensibly forced them to confess to past mistakes. A staggering 17% of the loans they made in a mini credit boom around 2011 have either had to be written off or are likely to be.