India’s once-troubled banks are generating huge profits

People looking for tips on how to run a bank do not often head to Mumbai, and for good reason. On May 2nd India’s Supreme Court ruled that the fraud-investigation office could prosecute auditors for their role in the collapse in 2018 of an infrastructure-finance firm backed by state banks. Last year four bosses at Indian Bank, a state lender, were jailed for fraud. Prosecutions of those at three other banks are grinding through the country’s courts.

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Yet Indian banks’ recent annual earnings have been spectacular. State lenders have led the way: Canara Bank’s net earnings jumped 87% against last year, Union Bank of India’s 61% and idbi’s 49%. Private banks are hardly laggards: icici’s earnings rose by 37%, Kotak Mahindra’s 28% and hdfc’s 19%. JPMorgan Chase, global banking’s benchmark for excellence, offers a return on equity of 14%. India’s…

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