MINT newspaper featured a column about the rating downgrade of SBI by Moody's. I do not understand much of the way financial matters work but having experienced the great fall of 2008, have a fair idea of the reason of why it happened. Rating agencies such as Moody's itself, Fitch, S and P etc were one of the culprits wherein they rated junk bonds as Triple A, etc etc. Yet i find it difficult to believe why all the newspapers take these rating agencies so seriously. A case in point is the recent downgrade of US of A. In spite of the downgrade after a month you see that US securities are thought of as more secure that their European counterparts. And so you see the USD strengthening against the Euro. From as high of 1.48 to 1.32 as of yesterday, isn't it strange.
Moreover specific to SBI, bottomline isn't the only bottomline which should be seen at. There is more to banking than mere profits. SBI offers its services at places where private banks do not go. It helps the people in need of banking. Happiness index too needs to be looked at. What is the use of a bank which makes millions in profits with no NPAs but helping the rich get richer ever expanding the difference between the haves and the have-nots rather than helping it bridge it. Please do not misunderstand me as someone who is against capitalism. India is on the world map due to capitalism, yes, but it should come at the expense of doing something for as myopic as profits.
By inducing conspicuous consumption we should not go the way of debt-fueled consumption a la Americans. SBI or PNB or other PSBs and Private sector banks may not have the deep pockets of say a Bank of America or UBS or other western banks but what they have is a social responsibility towards the masses. I reiterate that please do not see me as anti-capitalism or a leftist. My only point is please look at the non-monetary and intangible side of things than merely following the materialistic way of western living.
Source: Mint Newspaper Oct 5, 2011