"Nine decades of trust," boasts Indian Bank's slogan. Well, maybe eight. The proud state-owned institution, headquartered in Chennai (formerly Madras), slumped in the 1990s. In 1999, a "management advisory group", appointed by India's central bank, noted that Indian Bank's "accumulated losses exceed its capital and reserves". It was, in short, bust. The bank groaned under mountains of bad loans, many of them made for political or corrupt motives. Its workers were ageing, risk-averse and demoralised, their unions strong and change-resistant. For all the recent excitement about India's fast-growing information-technology sector, much of the country's economy has remained mired in its bad old ways. Indian Bank suffered an acute case of a disease that afflicts many public-sector banks (which together control three-quarters of banking assets)-bad loans. These make up less than 10% of total bank lending in India's official figures, but may actually be double that, according to estimates published in June by Crisil, a private credit-rating agency. That is still far below levels seen in China, or in South-East Asia after its slump. But there are serious concerns about the ability of India's banking system to deliver credit efficiently to an economy expected to grow by at least 7% this year.
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