Sunday, June 5, 2016

Banks Are Sick But Politicians , Bankers, Borrowers And Auditors Flourish

The way government is moving, the way Sri Vinod Rai thinks, the way Finance Minister Sri Jaitley ji and Dy FM Sri Sinha ji are visualising stressed assets and declared No Performing Assets  NPA of banks, the ways they suggest to clean bank's balance sheet, the way they are protecting looters and shielding erring officers, they way they turn their blind eyes on political exploitation of PSU banks  I may say without hesitation that volume of NPA in banks will continue to go up and up and real guilty will never be punished , rather they will continue to get   promotion after promotion as usual.

I may say that government may alter the colour of bad assets, they may put carpet on malady, they may change the bottle of wine,but they cannot reduce NPA, they cannot reduce malady and they cannot change wine of the bottle. Government may sell bad assets to ARC or convert them into bonds or different forms . They may force RBI to change definition of NPA or force banks to restructure bad assets or may indirectly advice banks to indulge in evergreening of stressed assets.


Banks may write off bad debts to hide their evil works . Banks may compromise with bad borrowers and sacrifice huge interest of banks in the name of cleaning balance sheets. But they cannot put brake on ever increasing slippages and cannot contain ever rising trend in bad assets.

Banks can give quickest promotion to their Yesmen but cannot nsure quality in lending.They can post good officers to critical places and reject them in promotion processes, they can recruit officers at higher packages from campus and they can employ thier kith and kin in the name of specialists but cannot improve quality of working and honesty in working in banks.

Because the evil culture of promotion to flatterers , promotion to bribe earners and evil culture in lending are deep rooted . Officers as well as politicians from top to bottom are birds of same feather. They all are busy in making their own career bright and prosperous instead of protecting their bank. Irony of the entire episode is that looters are standing in disguise as savers.


Officers in Bank care more for their bosses and politiicans care more for their vote bank as also for their families , friends and relatives. Honest officers in general are few in numbers in all banks and they are never united in raising voice against injustice. On the contrary bad officers are united strongly to protect each other when they are trapped and when their evil works are exposed. Good officers are either sidelined or they keep them aloof from bad officials to save their skin and to protect their families from unbearable agony .

Thieves cannot suggest ways to catch thieves.Looters cannot disclose modus operandi of their loot . They canot dig their own grave by telling truth behind ris in stressed assets in banks.  It is always easy and safe for them to put blame squarely on economic recession and global slowdown . This is why no reduction in stressed assets is visible though officials, ministers and RBI dignitories use to conduct meeting every quarter to discuss ways to contain bad debts and they appear to make efforts for improving health of banks for decades and decades

As long as Government and RBI  consider causes of sickness as medicine to cure sickness, there is no doubt to me that sickness of public sector banks will continue to detriorate and remain critical till it finally collapse. Government can infuse capital year after year because it is easy to punish innocent taxpayers and depositors than to punish bad bankers, bad borrowers and bad politicians.

God too cannot help them who do not want to be helped. Bankers are not as interested in improving health of their bank as they are interested to improve and brighten their own career and own fortune. They keep their accusing fingers towards political environment or economic policies or sectoral weaknesses. Corrupt officers and politicians are in general good aurators and they use their speaking power to motivate their mentors.


Private banks are as unhealthy as public sector banks. Private banks are little better only because they do not blindly follow the dictates of evil minded politicians and do not blindly put into effect  their ill-motivated plans.However irregularites in use of precious resources of their bank are more dangerous and they too are sitting on bomb of bad assets as their counterpart in public sector banks are.


RBI has neither will to control Bad HR practices and bad lending practices prevalent in these banks nor do they have  adequate manpower to discharge their duty as they used to do before launch of reformation era.


In general RBI officials are also victim of same culture of flattery and bribery as officials of PSU banks are.


Employees in banks can spend crores of rupees in extending red carpet welcome to their bosses and distributing gifts to their masters. They can waste  hundreds of manhours in making preparations for giving king like worshipping to their bosses during their visits in their area , but do not have time to ensure quality in lending and perfectness in making efforts for recovery of dues from defaulting borrowers.


Let us wait till  good senses prevail in regulators .



Public sector banks have added  bad loans or Non-Performing Assets (NPA )worth Rs 2.41 lakh crore for the last six months i.e. from September 2015 to March 2016. This is a 69% rise in bad loans over the last two quarters. In September 2015, the figure stood at Rs 349,113 crore, but at the end of March 2016, it was Rs 590,772 crore. The Reserve Bank of India had ordered an asset quality review at the end of the last financial year to assess the situation. Following chart reflects NPA figures of only 10  banks.


News Published in Indian Express on 4th June 2016 --RBI review unearths Rs 2,41,000 cr bad loans in last 6 months of FY16

Gross NPAs have gone up from Rs 349,113 crore in September 2015 when the RBI ordered the asset review to Rs 590,772 crore by March 2016.



Rise in NPA from the level of September 2015 to March 2016 , i.e. in six months period is

SBI 72.73%     (Rs.98172 crore  In March 2016 from Rs.56834 crore in September 15)


PNB 122.81%  ( Rs.55581   crore in March 16 from Rs. 24945 crore in September 2015)


Bank of Baroda 70.91%  (Rs. 40521  crore in March 16 to Rs.  23710 crore in September 15)


Canara bank  125.65%


Indian Overseas Bank  54.70%

IDBI Bank  68.55%

Banks in general are in bad health. Some banks declared bad debts in finacial year ended March 2016 and some other banks declared part of bad debts before March 2016 . Still good volume of bad debts are concealed by clever bankers by using various tools like restructuring or evergreening or rephasing . They will come out in coming quarters .

Volume of NPA is more than 10 percent of their total loan book in six banks , namely PNB, BOI, BOI, IOB, IDBI, CBI ad Uco bank. Other banks are approaching near 10 percent. This pathetic  position of so called strong banks has come to light in public domain only when RBI conducted Asset Quality Review of 150 accounts during March 2015 to Sept 2015 and built pressure on involved banks to treat all those accounts as sub standard (NPA) which has been found under stress by RBI officials.

Otherwise , all those accounts though bad were always certified as good accounts in preceeding years by team of auditors who use to carry out internal audit, concurrent audit, statutory audit and RBI audit from time to time of banks . Even now , I may add here that if all banks strictly and honstly  follow RBI norms of classification of assets, NPA ratio may rise even above 50% in some banks.

One may dream of a position when RBI conducts audit of all loan accounts which run in lacs and crores in number. Management of PSU banks as also that of private banks has been treating even bad loans as good loans for years and decades.

When some of their bad accounts exposed in the eyes of RBI officials, management of these banks  tried their best to convince RBI Governor Mr. Raghuram Rajan to give them time or to change RBI norms of identification of NPA accounts. But RBI Governor did not bow down and continued to maintain his position that either banks should recover the overdues and remove irrgularities immediately or treat them as NPA.

Lastly RBI allowed banks to classify  those bad loan accounts which has been pinpointed by RBI as NPA in phased manner, partly in December 2015 quarter and partly in March 2016 quarter. This is why , part of 150 accoouns coming under perview of AQR of RBI were treated NPA in December 2015 and part of it in March 2016.

RBI has further advised all banks to declared all hidden bad debts as NPA by the end of March 2017 and start action for recovery of dues from defaulting borrowers.

Here it is important to point out that all banks are audited by team of vetern Chartered Accountants every quarter and none of CA team thought it wise to say bad loans as bad . They did not consider it necessary to  insist that bad loans be classified as NPA.

Why? 

Because CAs earn lacs and crores of rupees in lieu of giving certificate of good health for bad accounts. It is team of these corrupt CAs who use to give certificate of good health to every banks every quarter after receipt of costly gifts and red carpet welcome by clever and shrewed officias of these banks.

It is Chartered Accountant who gave certificate of good health and best corporate governance to Satyam Computers  till its promotor Mr. Raju declared ongoing fraud in the system. Global Trust Bank was given the award of best bank in a year and next year the same bank booked unprcedented loss of Rs.1200 crore , lost its networth and finally merged with a PSU bank. More than two decades have passed after these two exposures, but government did not take any action to stop malpractices .

During last three decades , many banks failed , many Regiona Rural banks failed and many cooperative banks failed, but the then government did not think it wise to change the evil culture of blindly trusting corrupt auditors. Similarly government took no lesson from Harshad Mehta stock scam or Ketan Parekh scam .

Majority of Charterd Accountants in our country sell their signature .It is open secret. They are least bothered of correctness of accounts. They know how to manipulate sale figure, how to hide profits, how to distribute income by forming fake companies and so on. They know how to prpare a foged balance sheet to cheat bankers. 

It is CAs  who teach tips of tax evasion to business men and it is they who teach how to create black money by avoiding tax payment. It is they who prepare financial statements as per whims and fancies of business houses and collude with Income tax officials to help business houses in saving income tax payment .

 It is Chartered Accountants who prepare Balance Sheet and Statement of Profit and Loss account as per will of business men , as per value of loan needed and to suit the loan proposals submitted to a bank for getting finance .

It is CA who are undoubtedly and totally rsponsible for increasing stress in bank assets , for increasing black money in Indian economy and for remitance of  money in illegal ways to foreign banks by way of inflated export or import.

And to add fuel to fire, bank officials also work in nexus with CAs to sanction loans to unscrupulous business houses  so that they may earn bribes and get promotions quickly .

Our government has established a culture of trusting blindly on certificates of Chartered Accountants for all accounts, on rating of companies by rating agencies and certification of rectification submitted by various banks and PSUs. Even government departments manage certificates of good health from CAs and take a sound sleep even though they drain out crores and crore of rupees to serve their greed and cause loss to government  by hundreds and thousands of crores of rupees.

 Hundreds of scams have been brought to light during last ten years ,  but none to Ministers ever took proper steps to effectively deal with evil culture and to stop corrupt practices . Because persons sitting at top posts  are mostly birds of the same feather. They are nourished in same evil environment of flattery and bribery.

All Public Sector undertakings or private companies use CAs to hide their evil work, their fraud, their corrupt practices. Government preaches sermons to all to maintain transparency in action and in accounts but in practice there is none to cross check correctness and genuinity of certificates submitted by auditors.

As a matter of fact , majority of officials working in  banks or in PSUs in general are clever and corrupt and hence they protect each other from punitive actions and isolate good officials from mainstream so that their reign of injustice do not face any hurde. It is an established culture for decades and decades. They have so many lame excuses to get rid of punitive action  against  for their evil work  and they use pressure from top officials and ministers to close their files related to irregularitis and that of corruption.

In addition to present volume of stressed assets, declared or hidden , A whopping Rs 1.14 lakh crore of bad loans have been written off by 27 public sector banks (PSBs) during FY 2012-15

For the fiscal ended March 2015, public sector banks have written off loans amounting to Rs 52,542 crore, an increase of 52.6 per cent over the previous fiscal, as per the RBI data.
These 27 banks had written off Rs 34,409 crore in 2013-14 while Rs 27,231 crore in 2012-13. So in aggregate, a staggering Rs 1.14 lakh crore were written off in the last three fiscals.

If we take into accounts, sacrifices made by banks in interest , it will become clear that about ten lac crores of interest amount has been sacrificed in arriving at compromise settlement with defaulting borrowers during last five to ten  years .

I am submitting below news published four years ago which expressed concern on rising NPA in banks. In fact , Government did not take any action to stop rise in NPA in Banks,  other than making false promises year after year.

NPA levels in 2011-12 highest in 5 yrs: RBI-Business Standard-02.102012
Net NPA ratio for private banks declining for last 3 years


The banking system’s non-performing assets (NPAs) in 2011-12 were the highest in the last five years, according to Reserve Bank of India (RBI) data. Net NPA ratio in 2011-12 stood at 1.28 per cent, with the net NPA ratio of nationalised banks (excluding State Bank of India, or SBI, and its associates) crossing the one per cent mark for the first time in the last five years, at 1.43 per cent. At 0.68 per cent, the ratio was the lowest in 2008-09.


As a matter of fact culture of hiding bad loans started from the year 1991 when our country adopted the policy of reformation, privatisation and liberlisation. Culture of sanctioning loans by organising loan mela to serve political interest of political parties is older than that .Politicians started exploiting banks for personal gain after natiolisation of banks. Unfortunately same culture still persists in some form or the other. Politicians first used banks for poor and downtrodden. Then they started using banks for development of infrastructure and other high value projects in which government is suppposed to invest.

Since government use their resources in distributing freebees, charities, aids and subsidies to please various sectors of the society to enhance area of their vote bank, they are left with only one alternative , that is to use bank's short term fund for long term projects . It is they who created asset liability mismatch in banks. It is they who created liquidity problems for banks by gradual reduction in SLR and CRR.

Government  cannot increase taxes on rich classes because they are source of political fund. They canot reduce subsidy of poor because of loss in vote bank. They usually face scarcity of resources to cater to public demand of freebees. It is only banks which has been used by politicians to increase their fortunes and hence banks have to  suffer losses and there is no hope for any improvement until there is change in attitude of politicians.

From time to time , paticularly on the eve of general election , ruling parties announce waiver of loans to attract voters in their fold. Then opposing parties make promises that if they are voted to power , they will write off small loans of farmers and traders . This has adversely affected repayment culture.

This is why , I use to say that politicians are more responsible for pathetic health of public sector banks in particular and all PSUs in general.

Even judiciary do not give value to court cases filed by banks to recover money from defaulters. They add fuel to fire. Large scale corruption in courts and  use of political power in recruitment of judges and transfer of judges have created an impression in the minds of clever defaulters that neither banks nor courts can recover money from them until they have got political patronage ,they know that all are manageable.


Time has come to fix responsibility on all who have directly or indirectly contributed in creation of bad assets and in creation of black money in the economy. Government has to understand differenc between man made problems and natural problems. If we continue to make lame lame excuses to justify fraud and corruption , we maynot cure the sickness of banks , nor of any PSU or any government department.

It is necessary to award honest performers and it is equally necessary to punish erring officials and specially to those whose intention is bad. It is necessary to stop politicians exploiting banks for vote bank . It is necessary to stop and punish politicians who build pressure on banks to achieve imposed target in short time just to please Ministers.It is necessary to stop top  bank officials to advise branch officials on phone for sanction of loan as per their sweet will.

We have to stop totally target based lending . We have to stop organising loan melas to please Ministers and politicians. We have to stop culture of loan waiver schemes. And we have to activate judiciary so that money is recovered from wilful defaulters in fixed time frame.

WE Have to learn to give value to honesty and sincereity and stop giving value to flatterers in transfers and promotions.




ALL INDIA BANK OFFICERS’ ASSOCIATION                (Central Office : Chennai)

Circular No.11/VI/2016
May 25, 2016
 
 
To:
ALL UNITS / STATE COMMITTEES
 
Comrades,
 


FAST FORWARD MOVEMENTS ARE TO BE STONEWALLED
CIRCUMSTANCES ARE CRITICAL HENCE THE ACTIONS TOO.


 
As rightly assessed from the time of the present Government assumed office, one of the prioritised agenda consistently pursued was reforms in the Financial Sector.  Before assuming the office, the tailor made report of P.J.Nayak Committee was published thereby the directions were set to be taken forward.  It got accelerated further by holding GYAN SNAGAM I in January 2015 followed by INDRA DHANUSH in August 2015 and GYAN SANGAM II in March 2016 highlighting the ills and to remedy the situation consolidation of Banks is the only solution.  Ballooning of bad loans and its reflections on the Balance Sheets of various Banks, hope, need not be explained at present
 
The loan default from the Corporates is main the cause for the proposed move of Privatisation IDBI through dilution of equity.  The assurances given repeatedly in the floor of Parliament have been thrown to winds.  The interview in the electronic media by the responsible representatives of the Government cause serious concern to the entire workforce.
 
The nine constituents met at Hyderabad on 11th May 2015 and unanimously decided to observe series of programmes culminating in a days strike on 29th July 2016 by the entire workforce in the Banking Industry.  But, the sudden move made through SBI administration to step up the pressures for swallowing the five Associates by SBI to enable them to upgrade the market share from the present level, was a bolt from the blue.  The workmen in 5 Associate Banks [SSBEA] repulsed back the move by observing the Strike on 20.05.2016.
 

The fast forward movements are to be stonewalled in a quick way as the jobs and job security of the human assets are at stake.  Our organisation along with AIBEA has addressed a communication to UFBU to prepone the date of strike.  The said communication is annexed overleaf.
 


REPULSE BACK WITH UNITED STRENGTH
TO PUSH BACK THE MERGERS OF BANKS AND PRIVATISATION OF IDBI
 
SAVE THE NATIONAL ECONOMY AND SAVE THE JOBS.


 



Yours comradely,
 /S.NAGARAJAN/
GENERAL SECRETARY



ALL INDIA BANK EMPLOYEES' ASSOCIATION
[Centra Office: CHENNAI]

ALL INDIA BANK OFFICERS' ASSOCIATION
[Central Office: CHENNAI] 


25th may, 2016
To
Convenor,
UFBU, Hyderabad
 
Dear Comrade,
After the rightful decision of the UFBU at its meeting held on 11.05.2016 at Hyderabad to give the call for strike on 29.07.2016, we find that Government is fast going ahead with their plans for consolidation and merger.  You are aware recently on 17.05.2016, in a hurriedly held board meeting, through a table agenda, decision has been taken to proceed towards closure of 5 Associate banks and to be merged with SBI.
It has also been decided to merge Bhartia Mahila Bank with SBI thus pulling the shutters down of this public sector bank.
Even on the announced decision to privatize IDBI Bank, few days ago, the Finance Minister has stated that this exercise will be expedited and completed in a few months’ time.
You are also aware that today it has widely appeared in the media that Mr. Vinod Rai has stated that 27 PSBs will be consolidated as 6 Banks and banks like Bank of India and IOB would be merged with some other bank.
Thus, we can find that the Government is moving very fast on their reforms agenda.  In this context, we strongly feel that there is a case and need for UFBU to consider suitably preponing our strike to convey our immediate protest.
We request you to consider this suggestion in consultation with other constituents so that we can take a formal decision in this regard.
 
With greetings,
Yours comradely,  

S.NAGARAJAN
GENERAL SECRETARY-AIBOA

C.H.VENKATACHALAM
GENERAL SECRETARY-AIBEA


 

                                                                                               

Copy to: All constituents of UFBU

Swamy VS Rajan


BJP Leaders Mr. Subramanium Swami says ,

“In my opinion, RBI Governor is not appropriate for the country. I don’t want to speak much about him. He has hiked interest rates in the garb of controlling inflation that has damaged the country,”
He further says ,“The sooner he is sent back to Chicago, the better it would be.”



Mr. Rajan is the on-leave Professor of Finance at the University of Chicago’s Booth School of Business.

Swamy said the Governor should have known the "inevitable consequence of rising and high interest rate and his policy was wilful and thus anti-national in intent".

Rajan, the BJP leader also claimed, has been sending confidential and sensitive financial information using unsecured Chicago University email id and publicly disparaging the BJP government.

Swamy said that six allegations levelled by him against RBI governor were "prima facie true" and require termination of Rajan's services "immediately" in the "national interest".

In his second letter to Modi within a fortnight, Swamy alleged that despite holding a sensitive and very high government post, Rajan has been making mandatory trips to the US to renew his Green Card.


My Opinion are as follows:

Action of Subramanium Swami criticising RBI Governor Mr. Raghuram Rajan is not at all good and need to be condemned by all. He should not use such derogatory word for a person who not only  holds prestigious post of the country but also has earned name and fame in world economic forums. 

Mr. Rajan holds one of top and prestigious post of the country. My Common sense says that none of government staff should be criticised in the manner in which Mr. Rajan has been criticised by Mr. Swamy.

Rajan is undoubtedly a talented and intelligent economist and fittest person  for the post of RBI Governor and he deserves to be awarded with second inning. However,if there is difference of opinion , ministers and expert officials should sit together , discuss and resolve i the issue in larger interest of the country . Politicians have to move above politics and take care of economics of the country . Economy cannot grow well by demoralising administrtive and executive workforce.

Swamy has to learn to respect image of others, officers as well as politicians . It is totally unjustified to malign any officer's image without justifying the same on proper platform and without giving an opotunity to accused to defend. After all there is a well defined procedure to prove guilt of anyone, if any,   and no one has the right to publicly humiliate any officer or any employee in public . This habit of open criticism will have bad impact on entire work force. And any political leader , whosover he or she may be , cannot be allowed to take law into his hand and act arbitrarily . Whims of any politicians cannot overrule existing laws and practices.

Public Statement  by politicians against top dignitories of the government or about any official cannot be considered good from any angle of consideration.


 I hope Prime Minister Mr. Narendra Modi will stop Swami like politicians in interfering in such sensitive matters.  Rivalry among executives , leaders of political parties and judicial heads will prove deterimental to the country.

Politicisation of executive post is not good for the health of the government and it undoubtdly adversely affects quality of governance and it leads to culture of flattery and bribery only.

However if there is any proof of ill-motive and bad intention of Mr. Rajan behind any of his action, Mr. Swami may appraoch appropriate authority or write a confidential letter to President of India for appropriate action.

There is no doubt that only officers who are apt in flattery and bribery will tolerate such humiliating statements as made by Mr. Swami. An officer with dignity will not like to remain in post such as RBI Governor if bad words are used against him. Country will suffer  if politiicans make mockery of officers and their  image for political gain. 


Country will grow only when officers are honest and devoted to their duty and when such officers get due respect and recognition..

 I have no hesitation in saying that UPA government lost trust of people of India only because it promoted culture of flattery and bribery in politics, in administration and in judiciary too . Officers who were ready to become  yesman of leaders of Congress Party got awarded during UPA regime at the cost of officers who used to serve devotedly and who were loyal to their post .Country had to suffer huge losses in various scam only due to bad culture promoted by Congress Party during their six decade rule.


I hope Mr. Modi will take proper care and will not allow their Ministers and party men to make unwarranted statement against any official which demoralises entire service class people. Let executive and judiciary work independently and without fear of repercussion from the side of ruling party until they violate laws and breach limits of tolerance in a civic society. Politicians must be subjected to certain norms of discipline and restraints as officials are supposed to follow.


So far as cut in interest rate is concerned, there is difference of opinion on whether it will help in increasing GDP growth in a country like India or not. In my opinion lowering of interest rate any further will badly impact savings and investment. Banks will face severest liquidity problems if interest rates are allowed or forced to come down . 

I rather feel that interest rate on deposits should go up to some extent , at least upto 10 percent to motivate savings and investment. In an effort to give comfort to loan seekers , government cannot give discomfort to lacs and crores of depositors who keep their hard earned savings in banks for at least keeping its value intact or for increasing its purchase value . And if there is no growth in deposits,banks cannot grow in credits.

I like to make it clear here that manufacturing or trading activity may not grow only by lowering of interest rate. In seventies and eighties , interest rate used to prevail much above prevalent current rate structure. GDP growth during that period was not less than what it is today.   

Moreover, Cut in Repo rate do not give much relief to banks and hence they cannot reduce lending rate in the same proportion in which RBI cut Repo rate.

Lending rate called as MCLR is depndent on many factors like average deposit rates, repo rate, CRR loss , tenor of loan, administrative and establishment cost , profit margin etc. Obviously repo rate is one negligible factor only among many factors which affects lending rate structure.

 And if Swamy feels that RBI should cut Repo Rate further and lending bank should also cut all rates, he should guarantee and explain how he will advise banks and savers to cope with decreasing deposit growth, increasing liquidity problem, increasing pain of savers whose livelihood depends on interest income. Not only this , he should also guarantee that there will be credit growth and GDP growth only by cut in repo rate.

I further say that if Mr. Swami is much concerned about the economy, he should sit with all experts in economics, with vetern bankers and politicians and with RBI officials to frame a uniform interest rate structure of deposits and for lending keeping in view priorities of the country. They should identify which secotors are saturated and which need intensitve investment and accordingly lending rate may be fixed for all banks, private as well as PSU banks. It will also remove unhealthy competition among bankers to attract clients . 

28 PSU banks are organs of same government but there is cut throat competition to give favour to high value customers. Eventually loss to any bank out of 28 banks will be a loss to India and loss to taxpayers only. If any of 28 banks suffer loss, the burden will shift to common men only.

I therefore make an appeal to Mr. Swamy not to make politics on post of RBI Governor . I hope he will exhibit maturity in politics and do not act in haste to remove Mr. Rajan . Swami should not behave like Kejriwal , otherwise he will lose his image which he has earned due to his principled stand against corruption. Swami has already faced huge criticism from all corners and earned bad name by dint of his attack on Rajan. He should control further damage by stopping his plan of character assasination of Mr. Rajan

Neither do I suggest to give second term to Mr. Rajan if there are any valid reasons for removal of Mr. Rajan  from his post. I simply insist that proper procedure should be followed to punish any officer , not only Mr. Rajan . He should present all substantial facts available to him against Mr. Rajan and allow legal scrutiny before juding him.  Mr. Swami should shed his personal ego and keep country above all party politics or self interest.

Subramanian Swamy steps up attack on Raghuram Rajan, lists 6 'charges' against RBI Governor in letter to PM-Zee News- 26.05.2016

BJP's Rajya Sabha MP Subramanian Swamy on Thursday stepped up his attack on RBI Governor Raghuram Rajan levelling six serious charges against him and asked Prime Minister Narendra Modi to immediately terminate his services.

This is the second time in two weeks that Dr Swami has written to Prime Minister Modi seeking immediate removal of Rajan.

In the first letter, written on May 17 , Swami had called Rajan 'mentally not fully Indian' In his second letter, Swami once again accused Rajan of raising interest rate to the detriment of small and medium industries

Rajan unfit to be RBI Governor: Swamy-The Hindu-12 th May 2016

BJP leader Subramanian Swamy on Thursday suggested that Reserve Bank Governor Raghuram Rajan be removed from the post as he was responsible for “unemployment and collapse” of industrial activity.

“In my opinion, RBI Governor is not appropriate for the country. I don’t want to speak much about him. He has hiked interest rates in the garb of controlling inflation that has damaged the country,” he told reporters in Parliament House.

The Governor’s actions have “led to collapse of industry and rise of unemployment in the economy”, he said. “The sooner he is sent back to Chicago, the better it would be.”
Mr. Rajan is the on-leave Professor of Finance at the University of Chicago’s Booth School of Business.

After assuming charge as RBI governor in September 2013, Mr. Rajan gradually raised the short-term lending rate from 7.25 per cent to 8 per cent and had retained the high rates throughout 2014.

He kept the rates high, citing inflationary concerns despite intense pressure from the Finance Ministry and the industry for softening them with a view to boosting growth.

The Governor began the process of lowering the rates in January 2015 and since then it has come down by 1.50 per cent to 6.50 per cent




Merger of SBI associate banks to cost Rs 3,000 cr: Bhattacharya-Business Standard 27th May 2016

However, benefits from merger including Bharatiya Mahila Bank will outweigh costs

The proposed merger of State Bank of India (SBI) with its five associate banks and the Bharatiya Mahila Bank (BMB) will cost it around Rs 3,000 crore, said SBI chairman Arundhati Bhattacharya, while announcing the bank’s fourth-quarter results here on Friday.

However, the benefits from the merger will outweigh the costs, she added. “We have sought the government’s permission to begin negotiations. We hope the permission will be forthcoming... We have tried to assess what a merged entity would look like, and I can assure you that there will not be any impact either on capital or NPA (non-performing asset) position, and we are well positioned for the merger.”

The five associate banks of SBI are State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore.

Much of the cost of the merger will accrue from the provident fund liabilities of employees. “On account of provident fund, the maximum amount we are anticipating is Rs 3,000 crore,” she said.

http://www.business-standard.com/article/companies/merger-of-sbi-associate-banks-to-cost-rs-3000-cr-bhattacharya-116052701193_1.html

What I commented in last few days

But the fact is that no improvement has actually taken place  at ground level during last three decades  in culture of lending , in position of recovery and in habit of negligence in monitoring in PSU banks. Situation has rather been deteriorating year after after. Top ranked Officers who are clever in manipulating balance sheet come out with shining balance sheet and get elevation through their mentor Ministers and RBI officials. But sooner or the later, in some quarter or the other , each bank has to book bad results and make false promises that they will deal with problems and try to reduce stressed assets in forthcoming quarters.
Read Full of MY Article By Clicking here


In fact ,Officials are in general busy in falsely glorifying their bosses. A Branch Manager glorifies a Regional Head,  RH glorify  Zonal Head , General Managers glorify ED and CMD and finally CMDs are busy in glorifying Finance Ministers and RBI officials. Most of them are fittest Yesman than real performers. They are good speakers to hypnotise ministers and bank staff both. They are more loyal to their sources of wealth and power than to their bank.







Wednesday, May 25, 2016

True Picture Of Banks Now Visible

Inspite of continued and repeated claims made  by various Ministers of various govrnments as well as by bankers of various banks during last one decade and more, that health of banks is not alarming and within control , one after other PSU banks is booking losses and losses are breaking all past records of banking industry. Even strong banks like PNB and BOB have created record in booking losses and in increasing volume of  bad assets in total credit. Still Government as well RBI says that banks are safe.

If SBI also dare speak the truth and if SBI shows courage to book all bad assets as NPA  , I think it will break all records and book maximum loss and create another history in banking industry. I think loss booked by SBI and total volume of NPA will not be less than aggregate of all PUS banks. It all depends on honesty of banks in identification of assets and recognition of income as per RBI norms.

No power can stop public sector banks moving from bad to worse even in coming years . 

Officers from top to bottom at powerful positions are birds of the same feather.They think more  for their welfare on priority and less for bank they are associated with. 

Unfortunatley and strategically  good officers are always posted by these clever top officials at critical places so that their voice is unheard and they loss their stamina to fight against corrupt officials and corrupt politicians. 

Politicians add fuel to fire and they leave no stone unturned to damage health of banks..They also think for their vote bank and use banks as milching cow for their family and friends.  None of them think for good of Banks. They are more often than not, selfish and corrupt.

NPA as such will continue to rise and rise. Politicians and top bank officials will always make promises to correct the health in forthcoming quarters. They are master in delivery of lectures in seminars and before media. But this will never happen that health of banks will start improving . 

We have been witnessing continued deterioration in health of banks for last three decades. Only manipulation and fraudulent methods are used to show banks as shining. Unless and until , purification starts from top and from their heart, I at least cannot imagine of improvement in health of banks or any fall in bad assets in near future .

Respected Sri Vinod Rai will almost fail in its target of cleaning and improving the health of ailing banks in the system he is supposed to work. 

While in audit, he used to submit report on sickness, iregularities, frauds and scams. But now he has to rectify them and to stop them which is not as easy as it is visualised by Government of India. . It  is a hard nut to crack because political leaders as well as bank officers are concerned more with their career and their position in power and in wealth and least bothered about health of banks and that of economy.

RBI Governor Mr. Raghuram Rajan has been making his best efforts to clean banks. But politicians will not allow him to move as freely as he wishes. Further it is not always good to say spade a spade.

It is also true that It is RBI which failed in discharging its duty to regulate public banks. In seventies and eighties , RBI officials used to inspect branches of various banks and there used to be a fear in the minds of bankers. Since 1991 , in the name of freedom, in the name of reformation , in the name of privatisation and lierlisation , RBI has left everything free  and Bhagwan Bharose.

After losing all, RBI has come to senses in last one  year or so and only 150 bad accounts pinpointed by RBI has brought almost all banks in red. You may imagine what will happen if all loan accounts are honestly scanned and categorised in appropriate category by bankers. 30 to 40 percent of advances will be found in the category of  NPA. And governmnt will be left with  only one alternative , that is to provide capital to save its image.

Are NPA-hit bank stocks worth investing now?

Banks are happy that they buy Certificate of Good Health from Team of Chartered Accountants every year. And Government is Happy that they get certificate of good health of banks from  Chief of  each bank. Let people of India suffer and taxpayer bear the brunt of their corrupt and ill-motivated moves.
WE did not take lesson from Satyam Computer fraud, from Harshad Mehta or Ketan Parikh scam and neither from ever increasing cases of frauds and misappropriation of bank's fund.




Financials Indicate True Health Of Banks ?

This is my blog written day before yesterday.


Sri Vinod Rai and his team in Bank Board Bureau (BBB) appear to be trying for cleaning balance sheet of public sector banks in particular and banks in general. RBI Governor Mr. Raghuram Rajan has also been engaged in cleaning of finacials of PSU banks for last two years. Prior to that Mr. Suba Rao also tried a lot to clean Balance sheet of PSU banks. Mr. Arun Jaitley Finance Minister and Mr. Jayant Sinha Dy Finance Minister are also sincerely trying their best to improve health of banks. Mr. P Chidambram and Mr. Pranab Mukherjee also appeared to think of best for banks.
public sector banks report cardBanking sector: More bad news expected



But the fact is that no improvement has actually taken place  at ground level during last three decades  in culture of lending , in position of recovery and in habit of negligence in monitoring in PSU banks. Situation has rather been deteriorating year after after. Top ranked Officers who are clever in manipulating balance sheet come out with shining balance sheet and get elevation through their mentor Ministers and RBI officials. But sooner or the later, in some quarter or the other , each bank has to book bad results and make false promises that they will deal with problems and try to reduce stressed assets in forthcoming quarters.



In fact ,Officials are in general busy in falsely glorifying their bosses. A Branch Manager glorifies a Regional Head,  RH glorify  Zonal Head , General Managers glorify ED and CMD and finally CMDs are busy in glorifying Finance Ministers and RBI officials. Most of them are fittest Yesman than real performers. They are good speakers to hypnotise ministers and bank staff both. They are more loyal to their sources of wealth and power than to their bank.



Bank Officials take care of their bosses more than thier banks. They are loyal to their bosses and their clients who make them richer and powerful . They in general do not take care of quality of loans they disburse and do not bother of monitoring loans sanctioned by their prdecessors or in matter of recovery of dues from bank loan defaulters. They are more often than not, busy in extending red carpet welcome to their bosses, their CMD, ED and other senior officials to earn their blessings, to cover up their evil works in lending and finally to get quickest promotion and choice transfers . They learn the art of gifting and polishing auditors for getting a certificate of good health of loan accounts in their bank.



Officals who are not apt in flattery and not expert in earning bribe are languishing in insignificant and critical places . Inefficient officials in general are ruling over efficient officials.  Inexperienced are ruling over experiened ofgicers. Majority of branches of each Bank is headed by either corrupt officers or inefficient officials or these branches are facing acute shortage of staff or they are working under prssure of higher bosses or local mafiamen. It is always  easier for them to compromise quality to survive in the corrupt system than to assert their knowledge and values.

Politicians are busy in boosting up credit growth in all banks by hook or by crook. They want to see rise in credit figures and they are least bothered whether the loans disbursed are going in the hands of good borrowers or bad borrowers. They are not aware whether considerable  chunk of loan amount is distributed in officials, middlemen, CAs and political leaders.

Poltiicans in general  want to gain political advantage by announcing one after other loan disbursal schemes and loan waiver schemes . They want that each bank and each branch disburse loans and achieve the imposed target .They make new schemes year after year and allow open loot in the name of achievement of targets fixed for various schemes. Quality is not their headache. They care for reserved and not for deserved.

Politicians  are not going to understand that every area and every town is not blessed with same potential for growth. They do not agree that each officer of bank do not have same quality and same knowledge. They do not understand that process of loan sanction is a time consuming process in the same way as it is developing love with opposite sex. They are not ready to accept that understanding credentials of loan seekers is not everybody' s cake.

In such situation and in such an environment where majority of officials from top to bottom are busy in flattery and bribery , where administrative and judicial officers are inefficient and corrupt and where politicians are crazy for enrichment of their vote bank , learned , intelligent and talented Sri Vinod Rai cannot hope for success in real cleaning of balance sheet , neither of PSU banks nor that of private banks. There is however no doubt in honest, integrity, sincerity and loyalty of Sri Vinod Rai.

It is remarkable here to say that it is lastly people of India who will have to face the brunt of falling and ailing banks . It is they who will get lesser interest and lesser dividend on their investment in these banks . On the contrary bad borrowers will get more and more loans at lower and lower interest and more and more discount when their loan account is considered as Non Performing Asset by lending bank. Bad borrowers will get more acceptance and good enterpreneurs will face so many hurdles in getting loans from banks .Dream of better GDP growth will get shattered in hands of evil minded care takers.

Vinod Rai and his team and Finance Ministers Mr. Arun Jaitley appears to be convinced that health of banks is not alarming . They are too much positive minded or they are inclined to appear to be positive minded to save country's image and ratings.

They appear to be busy in dealing with bad assets of banks, but in fact slippages increases faster than upgradation of bad assets almost in all banks . Some banks are considered strong banks in their opinion and some other are weaker in comparision. But their ideas and perception about a bank will continue to change and fluctuate from quarter to quarter. Some time bank 'A' will appear to be strong and some other time same bank 'A' will look like weaker.

I howevr observe that banks like PNB, BOB, IOB, OBC, SBI which were considered as strong banks are having the highest volume of bad assets concealed with the help of technology  and several tools of restructuring and evergreening and it is their cleverness that they are exosing their bad debts in slow and gradual manner. Banks which were considered weak two to three decades ago are still weak and their weakness has grown in valuecand volume . No sign of improvement is visible in real sense though government has been making efforts for more than three decades.

Fact is that each and every PSU bank is weak and their weakness have been growing relentlessly. Only point to be appreciated is that they are expert in hiding or exposing bad debts. It is completely their whims and fancies which works in taking decision on helath of a loan account. If they like they can conceal a bad accounts for years and treat it as Standard asset . When their evil works goes beyond control or when some of recalcitrant auditors or some of media men expose the hollowness of a company , these bank officials decides to treat a bad asset as bad asset. None of junior officers otherwise have courage to say spade a spade.

Window dressing in deposits, advances and recognition of bad assets has become the deep rooted culture in all banks and regulating agncies have no option other than to accept the inflated , manipulated and fabricated figures. There are many lames excuses like economic recession, global slowdown and natural hurdles to save their skins.

Government will have to do a lot of hard work for years and decades to get rid of sins of past officials and past politiicians who silently and brilliantly looted banks for their self interest and to gain in wealth and power for decades . It is not as easy to clean them as Mr. Vinod Rai and Mr. Arun Jaitley appear to visualise.

It will take very long period in real cleaning of banks and changing of deep rooted culture of bankers and politicians because still GOI and BBB are collecting opinion and views of those officials and politicians who promoted loot and evil culture of flattery and bribery . Thieves and looters cannot disclose their evil ideas to police . They can be good speakers and expert in flattery to bosses . They can be master in managing bosses . But they cannot give valuable ideas which may translate into real transformation and reformation in health of banks. 

For real change, Vinod Rai will have to work personally for a bank for years and then only he will be in a position to understnad ground reality. It is easy to make good policies but it is difficult to execute them in true spirit.

Public sector banks that declared their results till date in general reported quarterly losses. or sharp erosion in profit , as non performing assets (NPAs) continued to pile on after the Reserve Bank of India's (RBI) asset quality review (AQR).

Bank of Baroda, Central Bank of India , Allahabad bank, UCO Bank and Dena Bank reported a loss for the second consecutive quarter. Union Bank of India was the only exception reporting a small net profit in the quarter ended March 2016, though down 78% from a year ago. Bank of Maharashtra and Vijya Bank also reported little profit.

In near future , we will witness more devastating results from other public sector banks. Hollowness of so called strong banks will also be exposed, if they truely stick to strict prudential norms fixed by RBI for identification of assets and for  income recognition. Biggest bank is said to be SBI. I hope sooner or the later this bank will also tell the truth of bank . 

A day will come when FM and PM as also BBB will accept the truth and then they will take more effective steps to brighten future of banks.


 I have full faith in leadership, caliber and talent  of Mr Narendra Modi Prime Minister of India and his team associated with the task of cleaning these banks. I have full faith in ability , knowledge,potential and capability of sri Raghuram Rajan rbi governor.


I hope ,sooner or the later, thing will improve because they all are sincerely working on it.


Click Here To Read How CMD And ED are Selected And Officers Are Promoted


Also Read This blog


Bank of Baroda

It posted a loss of Rs 3,230 crores almost repeating its December 2015 performance when it announced a record Rs 3,342 crore loss.
For the full fiscal year ending March 2016, the bank posted a record loss of Rs 5067 crore.
The bank set aside Rs 6,857 crore as provisions, up 3.5 times from the Rs 1,817 crore in March 2015. Provisions included Rs 1,564 crore for pension liabilities and Rs 300 crore for NPAs in the bank's branches in UAE.
Gross NPAs increased to 9.99% from 3.72% and in actual terms crossed the Rs 40,500 crore mark up from Rs 16,261 crore in March 2015.
UCO Bank

It reported a record loss of Rs 1,715 crore because of a near 2.5 time rise in provision to cover for NPAs. The loss was higher than the Rs 1,497 crore loss the bank had reported in the preceding quarter.

Gross NPAs of the bank doubled to Rs 20,907 crore from Rs 10,265 crore it reported last fiscal.

Total provisions more than doubled to Rs 2,283 crore compared with Rs 1,018 crore a year ago hitting profit.

This is the second consecutive quarterly loss for the lender after the RBI directed banks to recognise some loans particularly linked to the infrastructure and metal sectors as NPAs.
Allahabad Bank

Bank reported a loss of Rs 581 crore for the March quarter, compared to a profit of 203 crore a year ago as provisions rose to Rs 2,487 crore.
The bank's gross NPA ratio rose to 9.76% from 6.40% in the preceding quarter and 5.46% a year ago. In absolute terms, gross NPAs rose to Rs 15,385 crore at the end of March from 8,358 crore a year back.
Union Bank of India

This Bank's net profit fell to Rs 97 crore in the quarter ended March 2016 from Rs 443 crore a year ago. However, provision for NPAs increased to Rs 2008 crore from Rs 833 crore a year ago.

Gross non-performing assets (NPAs) rose 85.49% to Rs.24,170.89 crore at the end of the March quarter from Rs.13,030.87 crore a year ago

The bank's gross NPAs rose to 8.7% in March 2016 from 4.96% in March 2015. Net interest income falls 1.71% to Rs2,084.69 crore, gross NPAs rise 85.49% to Rs24,170.89 crore, while provisions jump 55% to Rs1,564.67 crore
Central Bank of India
Bank reported Rs 898.04 crore loss as gross NPAs doubled and provisions rose four times to Rs 2,287 crore from Rs 617 crore a year ago.
Dena Bank
This bank slumped to a loss of Rs 326 crore in the quarter ended March 2016 compared to a net profit of Rs 56 crore a year ago. Gross bad loans almost doubled to Rs 8,560 crore versus 4,393 crore a year ago.

Vijaya Bank

Bank's Q4 net drops 26% on higher provisioning.
Gross NPAs as a percentage of advances rose to 6.64 per cent from 4.32 per cent in December quarter. Similarly, the net NPA ratio for the March quarter was up 4.61 per cent.
Provisioning during fiscal 2016 rose 62 per cent to Rs 1,390.51 crore from Rs 859.13 crore in the previous year.
For the year-ended March 2016, Vijaya Bank posted a net profit of Rs 381.80 crore, down 13 per cent, over Rs 439.41 crore in the corresponding period last year.

Bank of Maharashtra

Bank's Q4 net loss at Rs119.84 cr.For the entire 2016 fiscal, the bank’s net profit also saw a fall of Rs. 100.69 crore in comparison to Rs. 450.69 crore in the same period previous fiscal. Total income however, stood marginally higher at Rs. 14,072 crore against 13,671 crore in the previous year.

Gross NPAs and net NPAs stood at 9.34 per cent and 6.35 per cent, respectivel. The stressed accounts portfolio declined to 13.29 per cent from 13.47 per cent during the financial year.

Indian Bank

Bank has posted a 59 per cent drop in its net profit to Rs 84.5 crore for the quarter ended March, from Rs 206.1 crore in the corresponding quarter last year.


The bank’s gross non-performing assets (NPAs) rose to Rs 8,827 crore, from Rs 5,670.4 crore.


In percentage terms, it rose to nearly 6.6 per cent, from 4.4 per cent a year ago.


Net NPA rose to Rs 5,419.4 crore from Rs 3,146.9 crore. In percentage terms, it was increased to 4.20 per cent from 2.50 per cent.


Asst quality audit done by RBI in last year  only for top 150 accounts has exposed hollowness of almost all public sector banks. Most of them are either in huge loss or have  faced huge erosion in profits during the financial year 2015-16. Big jump in Gross Non Peforming Assets have been reported by almost all PSU banks. Halth of private banks is also not as good as reported in public domain.

  If all loan accounts are audited by RBI ,one may very well imagine the fate of these banks, one may also understand the gravity of sickness in banks and at least realise now how much Congress party had already damaged during decades of their misrule.

Biggst bank ,SBI will declare result on 27th of this month. You may imagine how much painful the result of SBI in fourth quarter  will be if they too follow  in true spirit the advice given by RBI Governor Mr. Raghuram Rajan regarding asset quality of top 150 accounts audited by them.. I have no doubt that SBI will leave other banks far behind in matter of loss and Gross NPA and break all records of the past.

SBI has delayed maximum in publishing results only because they are perhaps busy in manipulating figures so that damage is reduced to best possible extent. But in the long run, they will also have to come out with correct figures on losses, provisons and NPAs. 


Some other banks have also cleverly and fraudulently managed to save their image by making lesser provisions for bad assets and booked little profit fraudulently just to save their falsely brightened career from damage.

Finance Minister Mr. Arun Jaitley and RBI Governor Mr. Rajan are still in dark about real volume of stressed assets . They are unable to visualise the volume of pain hidden in bank's books of accounts. NPA may grow from 5 to 50 percentage if all banks shows true honesty in saying spade a spade, in rcognisiing and  identifying bad assets strictly as per RBI prudential norms.. Still they have huge volume of bad and stressed assets hidden in disguise as  standard assets so that lesser provision is necessitated..

Clever bankers have been manipulating figures for years and decades. Window dressing is persisting for decades despite all preachings by RBI and MOF . Every quarter they claim that health of their bank will improve from next quarter. But each quarter , health deteriorates only. This has been happening for last five to ten years. FM and RBI will take long time to understand the gound reality.

Let us see when real truth emerges out and when real reasons are identified by Ministry of Finance and by RBI officials and when effective steps are taken to improve quality of banking. Let us see when banks start focusing on their assets including human assets and stop focusing on their bosses and non- banking activities.

Clever and corrupt bankers as well as politicians usually blame economic slowdown or interest rate or nature but never punish real guilty. They say on the one hand that GDP growth of the country is highest in the world. But when they talk of health of banks, they say that bad assets are creation of ecoomic slowdown and global recession. Is it not inconsistent with ground rality.

Until real guilty people are punished and until there is change in culture of bankers and politicians, we should not dream of reformation or real cleaning in banks. We need not focus as much on cleaning of balance sheet as it is needed to focus on  cleaning of minds and hearts of bankers, borrowers and politicians.

FM Mr. Arun Jaitley has said yesterday, that media men , opposition parties , Parliamentarians and court should not intervene in banking activities related to lending as well as compromise with recalcitrant and defaulting borrowers.

 I would like to mention here that neither media men nor court interferered anytime during last years and decades in the matters related to lending decisions and in decisions related to writing off of bad loans or in arriving at settlment with bad borrowers. Bankers and political leaders are to be held responsible for all lapses and evil works which has resulted in erosion of health of PSU Banks. 

Banks have rather enjoyed absolute freedom in sanction of loans and in wirting ff of bad loans. Politicians exrt pressure from top , but they do not burn their fingers by giving written instructions to do this or do that. Political masters advice Chiefs of banks on phone what a bank has to do and what not to do. Similarly bosses of banks give verbal instructions to their subordinates.

Rather this unregulated freedom given to bankers in the name of reformation and autonomy to bank management in the year 1991 has only resulted in accumulation of so much pain and so much rise in sickness in these banks. Techonologial advancement and introduction of Core Banking Solutin has made it difficult for bankers to conceal their sin for long.

FM cannot understand the real picutre of hidden malady and bad culture of bankers and politicians until he continue to collect the views from same gang of Chiefs of Banks who have contirbuted in increasing pain in these banks. Thieves cannot suggest right and correct  ways to police to catch culprits. During last thre decades , every FM has accepted the hidden malady and irregularities in banks but they cleverly ignored the prescribed medicine to cure the sickness. Various committes suggested various ways and means to clean banks , but unfortunatley none of them put into action.

Vinod Rai , head of Bank Board Bureau (BBB) also in last few days has said repeatedly that bank officers should not be questioned how they take lending decisions and how they write off bad loans and how they sacrifice huge amount of money in arriving at settlement with defaulting borrowers . Vinod Rai also perhaps assumes that all bankers are discharging their duties with honesty and sincereity. 

Vinod Rai also knows that politiicans of this country are beyond control . He knows that vote bank politics of ruling or opposing parties cannot be stopped. That is why he advices total blindness towards ongoing corrupt culture. Actually our country has witnessed various scams causing loss to the tune of thousand and lacs of crores of rupees to country and hence loss arising due to bad debts amounting to 10 or 20 lac crore by PSU banks appears very small amunt to Mr. Vinod Rai and to government necessitating action against erring officials and politicians.


I hope  concepetion and perception of learnd, honest, sincere  and intelligent person like Mr. Vinod Rai   will drasticaly change if he also peeps into accounts of any bank. Only forensic audit of each high value loan account , at least loans and advance with outstanding value more than Rs. one croe, can reveal how much problem is man made  and how much is due to unavoidable natural reasons.

If we look into reasons of smaller loans too, the situation will prove to be explosive and suicidal too. Because banks cannot avoid small loans which are equally unsafe and irrecoverable. They know that in the name of social welfare , banks have to lend farmers and small traders and industrialists to inflate figure of priority sector lending .Banks have to take part in charity banking as taught by political masters. Waiver of loan has been resorted to by bankers only at the instance of political masters from time to time and this has adversely affected the repayment culture in the country. Loan Mela culture has also contributed in worsening lending quality and in rise in corruption in banks. Let us therefore concentrate on only high value loans.

Culture of loan melas, culture of write off of loan and culture of protecting bad officials and politiicans has damaged health of banks. To add fuel to fire, regulators also resort to evil ways to cure ailing banks.

FM suggests merger and consolidation of banks. In my view , merger is not at all a solution to problem of bad assets. Merger will simply change the shape of banks and bring its name in list of top banks of the world. But it cannot change the quality of lending and quality of human resources running these banks. It cannot stop politicians exploiting banks for vote bank and it cannot stop them for serving interest of their kith and kin, friends and relatives.

FM talks of consolidation of PSU banks on the one hand and on the other they are giving license to Payment banks, differentiated banks, Post bank  and other small banks or big bank . This inconsistency in their policy has created more confusion than eliminating it or reducing it . They are dreaming  of  big bank  by merging smaller banks so that the new enitty may be reckoned in top 100  banks of the world . But the fact is that when management of banks is unable to manage small banks , how will they manage big banks is a million dollar question.

Some of  VIPs in government plead for higher packages for executives to make them more loyal . But they do not  like to say why government school teachers do not teach though their pay package is greater than that of their counterpart in private schools. Teaching in private schools is far better than that in public schools though government spend huge amount of money on education every year.

FM focus on quality of ED and CMD, but real improvement will occur only when due recognition and value is given to real performers in promotions and transfers. Quality of officers heading branches and administrative offices of banks is too poor to protect banks from disaster.

RBI Governor Mr. Rajan says that one third of ATMs are non-functinal or not managed properly to service requirements of ATM cardeholders. He should try to understand why has it so happened. Mindless and reckless expansion of ATMs and Branches has resulted in pathetic postion of not only ATMs but also branches of various banks.

Banks in public sector has opened branches without applying their brain and without having vision about future of these branches.They open ATM after ATM and branches after branches only to keep ruling party happier and in good stream so that their personal career gets brightened.

Politicians are also responsible for reckless expansion of branches. It is they who for the sake of vote banks built pressure on management of these banks to open branches in each village and then open one ATM associated with each branch. They do not understand or they are least bothered whether  these ATMs and Branches will be economically viable or not .

I have no hesitation in saying that not only one third of ATMs , but more than half of branches of PSU banks are critcially ill and non-productive. There are many branches in the country which do not receive  transactions from even 50 customers a day, but they have opened one ATM to such branches. Naturally per day hit at these ATMs can never be profitable. Similarly , bank officers do not have time or do not have quality manpower to adequately service these ATMs in time.

Prime root cause  behind deteriorating position  of health of banks is also its Human Resource Policy and its real execution in practice. Recruitment and Promotion taken place during last three decades has simply promoted a culture of bribery and flattery only. Officers and employees in general who are real performers are neglected and rejected in all processes of transfers and promotions which are said to be merit oritented. This is why majority of senior and experienced staff are not taking part in promotion processes taking place in banks every year.

Bank management use to say that they have scarcity of good workers, it is totally worng and false.  Still there are huge number of good officers who do not want to be elevated because they cannot manage flattery and costly gifts for their bosses. They do not want their families to be disturbed due to whimsical decisions of corrupt officers and baseless ruling in their banks. Every employee who joins a banks had high ambition to rise . But the culture of their bosses shatters their dream and they think it safe to avoid taking promotions . Who will change this culture? It will not stop until there is change in mindset of bosses.
public sector banks report card

Jaitley says that media , Parliamentarians and court should not question decisions of  bankers in lending and compromise settlements or in write off. 

I fully disagree with his views . 
Rather I like to ask Mr.Jaitley whom should we ask questions on why assets with more than 20 lac crores are stressed, why lacs of crores of good money is sacrificed to please defaulters.

Media and courts were in deep slumber  till case of Mallya came in public domain and it is only due to their intervention after exposure of Kingfisher default, rightly or wrongly, that government is now appearing as serious to contain sickness of banks and appear to be interested to recover money from at least wilful defaulters declared by banks themselves.


http://importantbankingnews2.blogspot.in/2016/05/do-not-question-bank-officers.html?m=1



Bank chiefs will not be questioned over NPA resolution decisions: Rai---Hindu Business Line
http://www.thehindubusinessline.com/money-and-banking/bank-chiefs-will-not-be-questioned-over-npa-resolution-decisions-rai/article8626679.ece

One in every 3 PSU banks has stressed assets higher than net worth-LiveMint 25.05.2016

In the last six months, 22 state-owned banks reported losses of Rs30,700 crore

Things have gone from bad to worse in India’s banking industry since the central bank cracked the whip on cleaning up their balance sheets. In the last six months, 22 state-owned banks reported losses of Rs.30,700 crore. They also wiped off 16.4% of their net worth.This reduction in net worth affects the already precarious capital position of these banks.



Need to empower banks to deal with non-performing assets: FM Arun Jaitley -
Economic Times 25th May 2016
The reaction of the media, parliamentarians and courts ended up weakening banks, the finance minister said. "Some of us in our bonafide enthusiasm are doing exactly the opposite. The media will make a business loss look like a scam when it is not. MPs will demand 'recall all loans' not realising that economic activity will come to a standstill. And the courts will take over the management of NPAs. Now, as a result of these three factors, we bring unfair pressure on executives of banks who coul ..












Folowing are few of my blogs written in the past.



There is an old saying that it is easy to market good customers but difficult to sustain them. It is easier to open new branches but difficult to manage existing branches in fruitful and effective way. It is easy to recruit new staff but difficult to make them able and capable to do sound and healthy banking. it is easy to recruit new officers but difficult to keep them in bank for a longer period. 



It is easy to keep bosses happy but difficult to customers happy. It is easy to spend money on big bosses on their hospitality but very hard to spend    on improvement of customer service and in extension of time bound quality service to customers upto the level of their satisfaction and in delightful manner.And the more important is it is easy to enhance quantity of any element but difficult to enhance quality of them.






It is unfortunate that bankers instead of curing the sick system , instead of removing corrupt officers from top posts, instead of improving Human Resource policy to make it friendly for real performers, instead of accelerating recovery process, instead of providing adequate manpower , instead of strengthening risk management , instead of gearing up skilllevel of loan processing officers ,  instead of monitoring tools for keeping their asset healthy , instead of saying spade a spade in time and taking corrective action in time against defaulting borrowers or corrupt loaning officers ------------------------------------------------  

Bankers always blame interest rate for worsening asset quality or blaming global recession for rise in bad debts or requesting RBI to reduce Repo rate , reduce CRR or  pay interest on CRR to earn profit.



http://importantbankingnews.blogspot.in/2013/11/top-banks-are-top-in-bad-debts.html

http://economictimes.indiatimes.com/wealth/invest/banking-sector-more-bad-news-expected/articleshow/52372316.cms

Board Bureau chief Vinod Rai says it's time for mergers 
                     
Vinod Rai, the veteran bureaucrat appointed this year to run the new Banks Board Bureau, told Reuters the government stood ready to inject fresh funds beyond the USD 3.7 billion earmarked in the 2016/17 Budget.


Jaitley to meet public sector bank chiefs on June 6