Saturday, April 30, 2016


27-April-2016 13:18 IST
FM: Government has taken various measures to deal with the issue of Non Performing Assets (NPAs) in Banking Sector
The Union Finance Minister, Shri Arun Jaitley said that the Government has taken various measures to deal with the issue of Non Performing Assets (NPAs) in Banking Sector especially in case of Public Sector Banks (PSBs). The Finance Minister said that there are two categories of defaulters, viz. those who are unable to pay back due to economic slowdown both in domestic and global market and other reasons outside their control as well as wilful defaulters including loans sanctioned without due diligence by the banks. The Finance Minister said that the Government has taken various measures to deal with both these categories of defaulters. The Finance Minister Shri Jaitley was making his Opening Remarks at the Second Meeting of the Consultative Committee attached to the Ministry of Finance on the subject: “NPAs in Banking Sector” here today.

The Finance Minister Shri Jaitley further said that in order to deal with default due to economic slowdown, the Government has taken various measures to revive the stressed sectors which mainly include steel, textiles, power and roads among others. Shri Jaitley said that the Government has also done recapitalization of banks by providing Rs. 25,000 crore in the last year Union Budget 2015-16 as well as in this year’s budget 2016-17. He said that transparency and professionalism has been brought in appointment process for top management positions in the PSBs including Chairmen and Managing Directors. He said the Government has taken various measures to make the management professional, has given full autonomy to the banks in taking commercial decisions without any interference from the Government..

The Finance Minister Shri Jaitley said that Bankruptcy Law has been cleared by the Joint Parliament Standing Committee and is likely to be discussed in the current Budget Session of the Parliament. The Finance Minister also said that SARFAESI Act and DRT Act have been amended to make the recovery process more efficient and expedient. The Finance minister said that wherever it was observed that number of cases in which action taken by the banks against guarantors for recovery of defaulted loans is insufficient, the Government has advised the banks to take action against guarantors in the event of default by borrowers under relevant Sections of SARFAESI Act, Indian Contract Act and RDDB & FI Act. The Finance Minister said that a direction to this effect has been issued to the banks last month. The Finance Minister also highlighted the various measures taken by the Government for revival of stressed sectors such as steel, road, power and textile sectors among others.

Later the Members of the Consultative Committee gave their suggestions with regard to recovery of loans and bringing NPAs under control. Members suggested that there is need for bringing more transparency in the system and list of all the defaulters whose loans have been written off by the PSBs be made public. They asked for exemplary action against the wilful defaulters so that others do not indulge in similar activities. Some members appreciated the Government’s effort to make the appointment process for the top management positions of banks professional. Some members also suggested that there is need for restructuring of agricultural loans in order to help the farmers. Members also suggested that there should be no employment cut due to any amalgamation or merger of banks. Members asked the Government to ensure level playing field to all Indian entrepreneurs across the board. They suggested that due to wilful default by some prominent business men, others may not be considered and treated in a similar fashion. Some members suggested that a committee be constituted to finalise recovery process in case of loans given to big corporate houses by various PSBs.

The Members of the Consultative Committee who participated in the aforesaid Meeting include Shri Anirudhan Sampath, Shri Baijayanta Jai Panda, Shri Dilip Kumar Mansukhlal Gandhi, Shri Kailkesh Narayan Singh Deo, Smt. Poonam Mahajan, Shri PrabhatsinhPratapsinh Chauhan, Shri Ram Charitra Nishad, Shri Sriram Malyadri, Shri Subhash Chandra Baheria, Smt. Supriya Sadanand Sule, Shri Suresh Chanabassappa Angadi (all members of Lok Sabha); Shri Anil Desai, Shri Digvijaya Singh, Dr. K.P. Ramalingam, Shri Rajkumar Dhoot, Shri Ranvijay Singh Judev, Shri Satish Chandra Misra, Kumari Selja and Shri Sukhendu Sekhar Roy (all members of Rajya Sabha).

Along with the Finance Minister, the Minister of State for Finance Shri Jayant Sinha, Shri Ratan P. Watal, Finance Secretary, Shri Shaktikanta Das, Secretary, DEA, Dr. Hasmukh Adhia, Revenue Secretary, Ms. Anjuly Chib Dugal, Secretary, Financial Services, Shri Neeraj Kumar Gupta, Secretary, DIPAM, Dr. Arvind Subramanian, Chief Economic Adviser (CEA), and other senior officers of the Ministry of Finance attended the aforesaid Consultative Committee Meeting. 

Causes Of Rising NPA In Banks AND Risk Of Rating Downgrade -My Views On Naxatra TV on 27 APRIL2016 Part 1
Click Here To Watch Me Live On Naxatra TV

Principles of Sound Lending
Lending is one the primary function of a bank. The banks accept deposits from people and then lend that money to the needy people in the form of loans, advances, cash credit and overdraft. Interest received from these lending is the main source of income for the bank. So a bank should examine the security offered against loan, credit worthiness of the borrower and the purpose of the loan. Therefore a bank uses these following principle for smooth running of the business.

1. Liquidity - Liquidity is an important principle of bank lending. Banks lend money for short periods only because they lend public money (money accept as deposits from people) which can be withdrawn at any time by depositors. They, therefore, advance loans on the security of such assets which can be easily converted into cash at a short notice. A bank chooses such securities because if the bank needs cash to meet the urgent requirements of its customers, it should be in a position to sell some of the securities at a very short notice without disturbing their price much. There are certain securities such as central, state and local government bonds which are easily saleable without affecting their market prices.

2. Safety - The safety of funds lent is another principle of lending. Safety means that the borrower should be able to repay the loan and interest in time at regular intervals without default. The repayment of the loan depends upon the nature of security, the character of the borrower, his capacity to repay and his financial standing. Like other investments, bank investments involve risk. But the degree of risk varies with the type of security. Securities of the central government are safer than those of the state governments and local bodies. From the point of view, the nature of security is the most important consideration while giving a loan. Even then, it has to take into consideration the creditworthiness of the borrower which is governed by his character, capacity to repay, and his financial standing. Above all, the safety of bank funds depends upon the technical feasibility and economic viability of the project for which the loan is advanced.

3. Diversity - A commercial bank should follow the principle of diversity. It should not invest its surplus funds in a particular type of security but in different types of securities. It should choose the shares and debentures of different types of industries situated in different regions of the country. The same principle should be followed in the case of state governments and local bodies. Diversification aims at minimizing risks of the investment portfolio of a bank. The principle of diversity also applies to the advancing of loans to varied types of firms, industries, businesses and trades. A bank should follow the maxim: “Do not keep all eggs in one basket.” It should spread it risks by giving loans to various trades and industries in different parts of the country.

4. Stability in the Value of Investments - The bank should invest its funds in those stocks and securities the prices of which are more or less stable. The bank cannot afford to invest its funds in securities, the prices of which are subject to frequent fluctuations.

5. Profitability - A commercial bank by definition is a profit hunting institution. The bank has to earn profit to pay salaries to the staff, interest to the depositors, dividend to the shareholders and to meet the day-to-day expenditure. Since cash is the least profitable asset to the bank, there is no point in keeping all the assets in the form of cash on hand. The bank has got to earn income. Hence, some of the items on the assets side are profit yielding assets. They include money at call and short notice, bills discounted, investments, loans and advances, etc. Loans and advances, though the least liquid asset, constitute the most profitable asset to the bank. Much of the income of the bank accrues by way of interest charged on loans and advances. But, the bank has to be highly discreet while advancing loans.

6. Saleability of Securities - Further, the bank should invest its funds in such types of securities as can be easily marketed at a time of emergency. The bank cannot afford to invest its funds in very long term securities or those securities which are unsaleable. It is necessary for the bank to invest its funds in government or in first class securities or in debentures of reputed firms. It should also advance loans against stocks which can be easily sold.

7. Margin Money – in case of secured loans (A secured advance is one which is made on the security of either assets or against personal security or other guarantees. An advance which is not secured is called an unsecured advance), the bank should carefully examine and value of security. There should be sufficient margin between the amount of loan and value of the security. If adequate margin is not maintained, the loan might become unsecured, in case the borrower fails to pay the interest and return the loan. Margin means a sufficient gap between loan value and security value for ex if security market value is Rs 1000 then bank may offer Rs 800 as loan.

8. Principle of Purpose - At the time of granting an advance the banker must ask about the purpose of the loan. If it is for unproductive purposes, then there is less chances of repayment of loan. On the other hand, If it is for productive purposes then there is more chances of repayment loan value with the interest.

Tools Used By Banks To Assess A Person Who approaches For Loan

  • Banks use rigorous policies and analyses when determining if and how much money to lend to clients.

  • The methods used by banks are often summarized by categorizing lending analysis as the five Cs of credit.

  • The five Cs of credit are character, capital, capacity, conditions and collateral.

  • Banks use the five Cs for specific reasons respective to each category, but all are utilized to understand the risk of default on a loan.


It is important to a bank to have significant comfort with the character of its prospective borrowers. Indicators such as credit rating and borrowing history coupled with more qualitative factors such as honesty and integrity all support a case for a borrower's willingness and ability to repay a loan. It is important to assess the creditworthiness of a loan seeker and for this purpose it is important that the loan seeker is honest and of good character.


A bank needs to understand the capital position of the prospective borrower's business or personal wealth. More capital represents the borrower's ability to withstand volatility. It also demonstrates the commitment an owner of a borrowing entity maintains. A strong capital position reassures a lender of repayment capacity in a borrower.

In modern era , banks have started extending loan even to a borrower who does not possess own adequate capital  to sustain loss. This happens only when lender becomes more positive and ignores negative feature in the beginning itself to achieve imposed high target which puts banks in critical position at later stage.


Understanding capacity to repay a loan is critical for a bank during the underwriting process. Capacity is determined by the borrower's ability to generate cash flow to service the interest and principal on the loan. Strong cash flow from borrowers' normal business activities demonstrates capacity to repay debt and mitigates the probability of default.

Unfortunately , banks in order to achieve target does not give much value to cash flow to service interest and principal on the loan . Loan seekers also put entire blame on bankers when they fail to generate enough income due to misconception about business potential. It has become fashion on the part of borrower not to own responsibility for failure but shift entire blame on lenders . This is due to borrower friendly culture created by clever government .


A bank must also understand the broader market conditions affecting the industry, segment, market and overall economy in which its borrowers engage in commerce. Strong industry growth or economic conditions support a business' ability to generate cash and repay debt.


Lenders often take a lien on borrower collateral. In the event a borrower is not able to repay debt with its cash flow, a lender must rely on the quality and saleability of borrower collateral to repay the loan. A robust analysis of the collateral supporting a loan is an important step in granting a loan.

RBI issues master direction on merger of private sector banks -Economic Times- 22nd April 2016

The Reserve Bank of India today came out with master direction for merger of private sector banks and also between NBFCs and banks.

In another master direction, a compilation which consolidates instructions on rules and regulations framed by the RBI under various Acts, including banking issues and foreign exchange transactions, the central bank provided direction for issue and pricing of shares by private sector banks

My Observation has been explained in my blogs -Danendra Jain

The consolidation exercise could bring down the number of public sector banks to about six from the current 27, but it cannot change the attitude, culture and mindset of politicians and bankers who have jointly and severally looted banks for serving their self interest and mutual interest.

If government is really interested to save banks from further damage, it should merge all PSU banks and convert it into a unified Financial Corporation or a Unified Public Sector Bank .

In this way , government of india can decide priority of the country , define rate of interest payable on deposits and rate of Interest for various sector of lending depending upon priorities decided by it.

This will not only help in elimination of competition among 29 PSU banks ( which are all part of same government and same owner ) and force the unified bank to compete with private sector bank but also help Government in execution of it social welfare plan in true spirit.

I submit under my other  blogs in this regard

Vinod Rai Plan For Improvement In Health Of PSU Banks

Why Merger is needed

What Type Of Competition It Is In PSU Banks

Pros And cons Of Bank Merger

Danendra Jain Speaks On Naxatra TV

Bank’s norm for selecting auditing firms challenged-The Hindu 22.04.2016

Assailing the decision of the Bank of Baroda, which has fixed Rs. 150-crore turnover as the minimum eligibility for auditing firms to participate in the tender for its assignments, a Chartered Accountant has approached the Madras High Court seeking to restrain officials from going ahead with the decision.
The petitioner, Venkata Siva Kumar, alleged that the decision was arbitrary, capricious and irrational, made with a mala fide intention to eliminate all the medium and small Indian audit firms and pave way for an indirect entry of multi-national audit firms into this public sector bank and latter extend it to other public sector banks, seriously jeopardising the economic interest of India.
When the plea came up for hearing, Justice R. Subbiah ordered the notice to the Executive Officer of the Bank returnable by April 29.

According to the petitioner, it is a usual process wherein the bank calls for empanelment of Chartered Accounting Firms as per the guidelines the Chief Vigilance Commissioner.
The best among them, after due diligence, are selected and allotted the assignments to the operations of the bank.

“The audit firms once appointed will be carrying out the audit for three years with one-year cooling period. The conditions of the assignment are very rigid, needing 100 per cent examination of transactions on a concurrent basis and unit visits. Reports will be submitted by the 10th of every month,” he said.

On October 2015 a new Chief Executive Officer was appointed to the bank, who had two decades of working experience with a multi-national bank, which was audited by MNC audit firms, he added.

Mr. Venkata Siva Kumar alleged that the new CEO immediately took a decision to summarily terminate all the concurrent auditors doing the job throughout India and abroad without giving any reasons and the letter was posted to the CA firms March 30.
A new tender was floated on April 1, 2016 in which the eligibility criteria for the participants have been fixed as a minimum turnover of Rs 150 crore.

The petitioner alleged that the proposed tendering process exponentially increases the cost of operation without any corresponding benefit, seriously affecting the interest of the bank and the deposit holders, shareholders and innocent public, which is against the economic interest of our nation and sought to quash the decision. He pleaded the court direct an independent investigating agency to probe irregularities, conspiracy and criminal breach of trust, if any by the officials.

The 'bank hack' case reported by TOI earlier this month has just got bigger. An internal inquiry by Bank of Baroda (BoB), has found that at least 70 customers from various parts of Uttar Pradesh were duped in March. So far, 373 fraudulent transactions totalling up to about Rs 10.67 lakh have been detected in what could be the biggest cyber heist in the country.
Read more in following Link , click the link

Fraud And Manipulation To Brighten Balance Sheet

It has been reported in recent past by RBI that Rs 1.14 lakh crore was written-off by public sector banks (PSBs) in the last three years.

AS per a report published in the reputed newspaper The Indian Express , it has come to light in response to RTI inquiry that the Reserve Bank of India (RBI) says Punjab National Bank (PNB) wrote off over Rs 8,500 crore as non-performing assets (NPAs) in the last two years. But the PNB says it did not write off a single paisa during this period.

The Bank of India, on the other hand, claims its write-off in the last two years has been more than Rs 17,700 crore but the RBI puts the BoI write-off figure during this period at Rs 2,567 crore — less than 15 per cent.

RTI replies received by The Indian Express demonstrate disparity in figures of the banking regulator and the banks, raising questions about the extent of the bad loans. Most banks maintain they are not obligated under law or regulations to inform the RBI about the amount they write off.

Click Here To Read Full News Published Today in Indian Express

It anyone make analysis of various news related to bad debts, frauds, misreporting , window dressing , manipulation and fraudulent presentation of shining  balance sheet of each bank and each company of last few decades , truth will emerge and then it will not be exaggeration to say that the regulating agency like RBI or Ministry of Finance have totally failed to control, monitor and regulate public sector or private sector banks.

RBI and GOI both  trusts on certificates submitted by inspecting officials, auditors and bank officials as proof of good health of bank and correctness of financial conclusions arrived at different levels by different agencies. Our country in general runs on certificates. And certificates in general are purchasable commodity in the market.

Bankers obtain false certificates from its branches and bank auditors. Head office of these banks then prepare a certificate in RBI's format and submit a certificate of good health to RBI and RBI in turn assures Ministry of Finance that everything is OK in banking Industry .

Chartered Accountants who are invariably makers of artificial image of a firm and hence corrupt , submit false certificate of good health for each company and earn a lot of illegal or legal money in form of audit fees and misc charges. Similarly rating agencies sell good rating certificates to corporate houses so that they may borrow money from any lender easily. Majority of companies get success in managing good financial report about their company from CA of their choice.

We remember how a few years ago, a famous company called as Satyam Computer got an award for best corporate governance in a year and how in the next year a big fraud perpetuated by the  same company in nexus with auditors was exposed. We also remember how a highly reputed and popular private bank called as Global Trust Bank got an award for Best Bank of the year and the very next year a big scam of the bank came to light and the then government decided to merge this sick bank with a PSU bank called as Oriental bank of Commerce. There are still now so many so called strong banks which will prove disastrous in coming days.

WE also know how in last few decades as many as 23 private banks merged with other stronger bank, we know how many Regional Rural Bank merged with sponsor banks in last few years and we also know how many cooperative banks were forced to close operation in many parts of the country to conceal evil works of lenders and politicians.

RBI and GOI never try to learn lessons from frauds , failures and scams. They go on using one after other tools to change the bottle instead of changing the contents. Old wine in new bottle. All  governments of the past   have been seen  trying to put carpet on all evil works. Present government has though taken a lot of good steps in cooperation with RBI Governor , respected and learned Mr. Raghu Ram Rajan to clean banks. But it appears that for current government too, one and only panacea appears to be  merger and  consolidation of banks . I however do not favour it.

It is auditors who prepare false balance sheet for a company and it is they who certify accounts of a bad company which are fully manipulated and concocted. Satyam Computers is not an isolated example in corporate world. Majority of banks and companies are indulged in fraudulent presentation of financial reports. Lakhs of fake companies are in existence and SEBI is silent.

Every bank submits every year an audited balance sheet and they proudly come on TV to say that their balance sheet is certified by a team of CAs. It is also true that even after certification by veteran internal and external auditors , every year some bank or the other are exposed and their evil works come in picture . All stressed assets which are coming to light now have been given a certificate of good health by auditors in the past many times. People in general understand how bankers concealed bad debts and how they played foul game with stressed assets for years and decades to save provisions , to protect corrupt officials and to help corrupt borrowers in the name of positivity.

RBI knows very well how banks avoided provisions and how they inflated profit for decades and which got exposed almost a decade ago . RBI allowed  erring banks apportioning of accumulated large provisioning in five years and did not think it wise to penalise erring officers and politicians. It is a established culture in all offices to protect corrupt and to torture honest officers and whistle blowers so that an artificial peace and bright image is built in public domain.

It is CAs who teach lesson on saving and evading income tax and other tax liabilities to business houses and help them in creation of black money. Not only this , it is CAs who play a role of middle man among IT officials, bank officials, business houses and government officials for hassle free completion of a task. There is no doubt that every government department and every bank or insurance company or PSU take help of these CAs in preparation of false picture of the company or department.

Auditors say that they are poorly paid and their selection depends on whims of top officials of the bank and hence they have to act as per whims and fancies of bank management. IN the month of April and May , each audit team is busy in blackmailing with top officials of banks they are entrusted the duty of auditing and certifying the correctness of their financial papers including classification of assets, recognition of bad debts and calculation of profits.

When auditors are exposed , then Auditors make excuses that bankers do not show all books and papers or they are not given adequate time to audit. They use to take a false undertaking from bank officials to save their own skin in case of an unfortunate exposure of their evil works. In turn bank officials always remain ready with bouquet of flowers and spread red carpet for auditors and they are ready to spend any amount of money to keep auditors in good stream and to get their ill-motivated target achieved.

You will find that at head office of each bank, the game of bargaining is going on these days between team of auditors and team of bankers. And it happens every year in the month of April and May when auditors are purchased by bank officials so that their evil works are not exposed and their balance sheet shines as usual .

When we talk of vigilence officials or CBI officers posted in the department of CVC or CBI, they are either the same retired or unretired bank officials or persons who do not understand even ABC of banking activities. These important departments too complain of inadequate staff or inadequate time or lacking in quality staff. Even judiciary is victim of shortage of quality judges and short of adequate staff and this is why justice is delayed in courts too. Justice delayed is justice denied. Similarly all CAs and clever officers help in delaying exposure of sins of officials of a government body or promoters of a company for years and decades.

There is vicious circle of corrupt officials in each wing, banks, audit team, RBI, GOI, CBI and CVC. And each office has a gang of corrupt and clever officials who join links with various channels to secure success in getting attractive figure and in getting rid of penal actions. CBI officers and vigilence officers can be bought easily because they too are birds of same feather. All play role in protecting each other and not at all in protecting the institute they are supposed to serve loyally and devotedly.

In banks, only officers who are master in manipulation of figures, who are master in window dressing, who can furnish false and concocted certificates , who can manage auditors and vigilence officers are called clever and fittest officer eligible for promotion. This is why entire team from bottom to top act in tune with each other. Any officer who does not fall in line with this evil culture is thrown out and posted at the most critical place and tortured by frequent transfers or rejection in promotion processes. This is why a culture of flattery and bribery has taken roots in majority of offices.

In banks , officers who can deliver a good speech become popular and blue eyed boy for their bosses and soon chosen for important post and quickest elevation in career. Banks are run by manipulators. They manipulate IAS officers and pay handsome money in fetching deposits from them from various departments . They manage business houses and teach them how to avail loan and how to get rid of it. They know how to conceal bad loan under the wrap of standard assets and they know the art of getting a certificate of good health from Team of CAs each time . Chartered Accountants (CAs) help each of them in preparation of attractive and suitable papers and documents for sanction of loan to a company.

That is why I am not astonished that figure of write off submitted by individual banks and that by RBI do not match. Officers in general trust on figures furnished on their table by a team of Yesman . In all offices , almost same culture prevails. Evil works are exposed and come in public domain only when a rigid officer like Ashok Khemka who is honest and intelligent from toe to head stick to his gun and reveal the entire truth.

Only then media men get opportunity to write on it or to conduct debates on their TV channels. Lastly these media men start the game of blackmailing , they decide whom to expose , whom to provide coverage and whom to exonerate completely. They sit on chair of judge, jury and executors. Readers of newspapers and viewers of debates on TV are thus misguided and misinformed. True picture seldom emerges and very rarely it comes in the eyes of common men. In our country terrorists like Ishrat is proved innocent and given a certificate of honesty whereas persons of outstanding record of good performance is put in jail.

Lastly , a new culture has developed in each department. RBI officers and ministers say that if penal action is taken against erring bank officials, bankers will avoid lending and cause bigger damage to the country . As such they allow crime to be committed and perpetuated to maintain positivity in banks. It is easy to victimize persons like Ashok Khemka.

Actions are not proposed against auditors because if they are tortured, CAs will become jobless and students will not choose a course of CA as career.

Administrative officers and legal officers who play foul game with the system to earn illegal money are also not taken to task, because it is they who save politicians on many occasions and it is they who help them in earning illegal money and accumulation of wealth. As such politicians do not like to make these officials hostile to them. Politicians also keep silence on all evil matters because it helps them in building castles of progress in air. And so on. Even stock market is managed by manipulators and speculators to cheat innocent investors. There is an old proverb, birds of same feather flock together.

It is always easy to remove good officers and torture loyal officers so that evil works of evil officials are not exposed. This is why in our country good officers think it always wise to remain silent spectator of ongoing frauds and bad officers go on getting elevation after elevation . Crime grows and honesty is penalised . Old proverb , Honesty is the best policy no more holds good. In modern era , dishonesty, flattery and bribery are only keys to success

I do ot want to make comments on judiciary, because Chief Justice of Supreme Court has also highlighted the pathetic position of Indian courts and became emotional during a speech when PM Mr. Modi was also sitting adjascent to him.

Why Private Schools Exploit Parents?

Private schools and colleges in India are looting parents in the name of quality education.

I would like to focus here primary and middle schools where every year syllabus in a school gets changed, books are changed, tuition fee structure is changed, prices of copies and books supplied by the school is increased, new charges are levied on students in the name of devlopment of building etc.

In the past a set of books purchased by a parent could be used for decades by coming generation boys and girls and by children of friends and relatives admitted in the same class. IN modern era it is not possible because school management changes syllabus and books every year and students are forced to buy these prescribed books either from school itself or by a prescribed book dealer. Teaching standard is good in some schools but not in all schools . But there is no doubt that standard of teaching in private schools is at least better than that in government run schools.

So far as colleges for higher education like engineering , MBA and medical is concerned , tuition fee in these colleges have been rising year after year whereas quality of teaching is deteriorating continuosly.A few decades ago there used to be rush in government colleges of higher education , engineering colleges and medial colleges . Now situation has changed completely.

 In few reputed private colleges, quality of teaching is undoubtedly good and students passing out of these colleges get immediate placement . But in majority of private colleges , quality of teaching is questionalbe and student passing out of these colleges hardly get a good job.

It is important to mention here that management of majority of these primary schools and colleges conduct their own examinations. They manage examinations in such a way that almost all students pass examinations and awarded a degree comfortably. Majority of students are given marks above 90%. Students securing more than 90% marks in each school examination are however rejected in most of All India based competitive examination held either for admission in quality schools or for appointment in a good company.

Now the question here is why and how quality of teaching in India has been deteriorating year after year in majority of schools and colleges . Only in few schools and colleges , teaching is of high quality and where there is a mad rush of parents for admission of their wards. And governmnt of India and state governments are in general silent spectator of what has been happening in India for last three decades and more. Actually deterioration started since 1991 when Government of India gave freedom to private sector enterpreneurs to open schools and colleges.

I say so because before even upto eighties , parent used to give preference to government run schools and colleges for admission of their wards. It is due to the fact that quality of teaching in government schools has faced continuous erosion after freedom . More than fifty percent of government schools run on registers only. In many schools , numner of teacher is too low to cope with demands of students. Quality of majority of teachers is bbwlow standards. Classes are not regularly conducted. School inspectors ceritfy good health and earn regular bribe in lieu of it. Similarly examination papers are leaked and sold to students at a price. And so on.

IN two to three decades after freedom , government schools started facing criticism due to relentless fall in standard of teaching as well as discipline. Further since State governments did not care neither for expansion of schools and colleges to cope with demands increasing year after year due to increase inpopulation and nor did it adequate take care about quality of teaching and quality of examination. People started searching better private schools to avoid govrnment schools .

Political parties in power in state goverment started using teaching staff for election and for making propaganda in favour of ruling party. Unemployed youth associated with ruling party were arbitrarily appointed as teachers in government run schools and colleges. The culture of political exploitation of teaching staff gradually damaged the quality of teaching and discipline in these place of education and these schools have lost their image and acceptability  in public life.

After 1991, private schools and colleges started spreading in each and everynook and corner of the country and they are totally unregulated and uncontolled in any matte. They enjoy full freedom . It is seen for last few years , that parents facing exploitation in private schools have formed association and they have started raising voice in protest against these private schools. And sometimes TV media also give coverage to grievances of these victimised parents of students admitted in private schools.

But here the question is why such situation has arisen and who are responsbile for such sorry affairs of private schools and also that of governmnt schools.

Government of India or State government or media cannot stop exploitation of parents by private schools until government run schools really become true place of quality education. Eduction is important and poorest among poor also realise the importance of education for their child .Every parent as per their capacity try their best to ensure that their children are admitted in best schools even if parent themselves are illiterate or poorly educated. They try to make future of their child by hook or by crook. Various banks also extend loan facility to parent for getting admission of their child in schools and colleges if they fulfill certain norms of banks. But these parent feel cheated and disappointed when their child do not get good job even though they are having big degrees and even after spending huge amount in educating a child.

Parent like their child to acquire best talent in least cost. Since Government schools have become almost useless and mostly a place where lessons of indicipline are injected into the bloood of children.This is why majority of parents opt for costly private schools to make career of their child bright and prosperous.

Private schools have also understood that parents are constrained to opt for private schools as because government run schools are no more good for future of children. And since there is no option now left for parents, private schools also leave no stone unturned to exploit parents in the name of tuition fee or costly books or development fund or something else. There appears to be none to help parent facing exploitation in the hands of management of these private schools.

In America , all schools are govt schools and there is same syllabus for all schools upto class 12 and same examiniation. Education upto 12th standard is reportedly completely free . Children are taught values, morals,legal position related to various aspects of life , importance of nationalism etc during entire school education. Students upto class 12 are to face uniform examination in entire USA. When they pass 12th class, they are to face test for admission in colleges of higher education and pay tuition fee as per structure of private colleges. There may be merits and demerits in their system, but we Indains have to assess and ascertain its utility for our country and make necessary modification to suit our country.

But I have no doubt to say that all Indians too should also be given uniform education and face same examination all over the country. And then based on merit and potential for a subject , a student may be asked for opting for higher education .As far as possible, country should frame a National policy on Education. It is important to mention here that as per Constitution , education lies in concurrent list and hence central government may suggest and advice state governments in national interest.

Students of all caste and community and of all regions and religion must undergo same books, same teaching and same examination . Only then students of entire country may justifiably be selected for various course in various colleges.

The practice of donation has to be dispensed with immediately. Government must ban and penalise  all colleges who on the basis of value of donation admit even weak students for higher level courses and then pass them also on the basis of illegal money they get in lieu of passing . Government must stop schools and colleges who have made mockery of education and who are selling degrees to earn money. Such greedy private schools are posing danger for the country.

In India each school has its own syllabus ,own tuition fee structure and own exam, they loot parents and give max marks all. Passing of students least depends on quality of his understanding a particular subject but on money he or she pay to teachers for passing and for getting higher marks. Government has to stop it anyhow and make necessary law to ensure it.

Here I would like to say that Government will have to first improve the image of government run schools and colleges. They have to ensure that quality of teaching in such schools become so much good and attractive that parent stop giving prefernce to private schools. Govrnment have to ponder over it , why children of teachers of government schools, children of of government employees and children of politicians and that of ministers are not admitted in government run schools and why government employees who manage goveernment schools do like that their children admittd in private schools.

I hate those politicians and ministers and mediamen who simply abuse management of private schools and try to put various restriction on them . In the state of Delhi , government is forcing private schools to cut fee structure , to impart free education to children of poor families and to stop management quota etc. These instructions may appears to be good to common men and to media men. Govrnment may earn some words of praise from Delhi public. But in the long run , the outcome of these forced steps may prove fatal and harmful.

WE know that government run schools are not good. And now due to dirty politics , if private schools too become bad , where parents wil go for better education for their children is a million dollar question which every goveernment shound ponder over it. Obviously such politics may give some advantage to political party heading Delhi government , but it will spoil future of Delhi families and future of Delhi children will be doomed.

I therefore request Delhi Government and all those politicians and media men , please do not add fuel to fire. Education is already in worst status. Private schools and collages are only small relief left helpless parents. Debate on TV may spoil private school teachings also whereas Govt schools are already a place for fools and poor parents.

Private schools are not for charity, but for profit, they cannot be controlled by any government until government take proper iitiative to make government schools a true place for quality education and a temple for learning values .Government has to run schools as welfare scheme and they have to improve it , reform it and transform them to become pioneer in education .

Then only govrnment will have moral right to teach lessons to management of private schools. And the bitter truth is that if government schools become the best in quality and become affordable for all common men, I do not think that a intelligent parent will ever like their child to be admitted in private schools and face exploitation in their hands.

Exorbitant charges are realised from patients by private nursing homes and patients agree to give because they want complete cure of their patients even if it needs payment of higher charges. Private nursing homes are looting and pathologist are looting patients. It is an open secret.

But  Why?

Because government hospital do not take proper care of patients admitted there and there is no hope that patients will be cured. Rather it is an impression in public mind that these hospitals are killers and patients admitted there seldom come back alive .

Similar is the fate of public sector undertakings, banks, airlines, telecom service providers like BSNL. People of India do not want to even lodge a FIR in police station when they are harassed by someone or exploited by some office. They do not want even to appraoch courts of India for justice because they know that even judiciary in India is in grip of powerful politicians associated with ruling party or powerful officials or wealthy and musclemen .All these government entities are victim of dirty politics of past govternments and consumers are sufferers and they are left with no  alternatives, other than opting for private services at whatsoever costs these services are available in private sector.

Every state Government as well as central government has to introspect and make necessary changes in laws, modify their way of thinking and change their attitude and mindset . It is easy to abuse private sector but it is very much difficult to make government sector acceptable to people of India.

National Education Policy In USA

Education in the United States is provided by public schools and private schools.

Public education is universally required at the K–12 level, and is available at state colleges and universities for all students. K–12 public school curricula, budgets, and policies are set through locally elected school boards, who have jurisdiction over individual school districts. State governments set overall educational standards, often mandate standardized tests for K–12 public school systems, and supervise, usually through a board of regents, state colleges and universities. Funding comes from the state, local, and federal government.

Private schools are generally free to determine their own curriculum and staffing policies, with voluntary accreditation available through independent regional accreditation authorities. About 87% of school-age children attend public schools, about 10% attend private schools and roughly 3% are home-schooled.

Education is compulsory over an age range starting between five and eight and ending somewhere between ages sixteen and eighteen, depending on the state. This requirement can be satisfied in public schools, state-certified private schools, or an approved home school program. In most schools, education is divided into three levels: elementary school, middle or junior high school, and high school. Children are usually divided by age groups into grades, ranging from kindergarten and first grade for the youngest children, up to twelfth grade as the final year of high school.

There are also a large number and wide variety of publicly and privately administered institutions of higher education throughout the country. Post-secondary education, divided into college, as the first tertiary degree, and graduate school, is described in a separate section below.

The United States spends more per student on education than any other country. In 2014, the Pearson/Economist Intelligence Unit rated US education as 14th best in the world, just behind Russia. According to a report published by the U.S. News & World Report, of the top ten colleges and universities in the world, eight are American. (The other two are Oxford and Cambridge, in the United Kingdom.)

Education Policy In USA

Education is an instrument of the broader social order. When society changes, education, sooner or later, also changes. Few activities or agencies, however, change as slowly, or in such small increments, as formal education–both schools and colleges as well as both public and private institutions. Education's roots are deep and wide, penetrating almost every facet of society. Hence, education is subject to virtually every political force, including those that want change and those that want to protect the status quo.

Public K–12 education–which operates across fifty states, 14,000 local school districts, and 100,000 schools; involves 5 million employees and more than 48 million students; and costs more than $2 billion each day–is too large, too costly, and too enmeshed in political dynamics to change quickly. Postsecondary institutions–colleges and universities–have become equally ponderous. With the advent of post– World War II enrollment increases; the significance of university-based research for preserving the nation's economic, medical, and military preeminence; and the substantial assumption of student financial aid by government, higher education also has become a major feature of the political landscape and become engulfed by much of the inertia that immobilizes lower schools.

For most of American history, the nation's most prestigious elementary and secondary schools and elite colleges have been few in number, and their private charters and religious affiliations have rendered them generally independent of government. But for colleges and universities, nearly all of which, in the early twenty-first century, are accepting student financial-aid subsidies from government and engaging in government-sponsored research, this situation has changed. Government now is a major constituent for higher education, both public and private.

Even for private preparatory and religious elementary and secondary schools, the condition of independence from government could change. If the U.S. Supreme Court approves allocation of public funds for private and religious institutions, private schools could come under the full umbrella of public policy in the same way as their public institutional counterparts.

Still, even as subjects of increasing politicization, and even if only at a glacial pace, schools and colleges do change. Formal education at the onset of the twenty-first century exhibited many differences from that of even thirty years previous, and it certainly was different from what children and parents experienced in the early part of the twentieth century.

The Basics of Educational Policy

Read more: United States Educational Policy - The Basics of Educational Policy, The Pressure for Reform in American Education, Defining Policy -

Friday, April 22, 2016

Merger Of Banks And Privatisation Of Banks


Dear friends,

An atmosphere is created in the financial sector that the Merger of the Banks and the Privatisation in the Banking Industry is imminent and all the stake holders are only waiting for the date of formal announcement.

It has to be accepted by all the stake holders and particularly the work force that, though it is highly organised and structured, failed to register its protest loudly.

The primary stake holder and the major beneficiary of public sector – the Indian Public- maintain cool, as if it is an issue to be fought by the employees of the Industry.

In this background, the Government has accelerated its pace towards the process of privatisation which was initiated exactly 25 years back.

Yes friends,

The privatisation move was launched in ’90 and the well oiled Government machinery through the other Institutions like RBI and IBA, strategically has been executing relentlessly with all amount of patience throughout which has reached the climax now.

Many committee reports in the name of experts were released during this long drawn process, which has been slowly injected as an anesthetiser to cause an insensitivity among the stake holders.

Let us list out the various steps employed over a period of 25 years to transfer the huge public sector assets in the hands of private sector.

A big publicity and propaganda was unleashed during 90s on the Government’s inclination towards privatisation and attempts were made to influence the public towards privatisation.

Government holding was reduced in the Banking sector and the Nationalised Banks had to shift their status from “ WHOLLY OWNED BY GOI to GOI UNDERTAKING” which resulted in an inclusion of a set of directors in the Board under the category “ SHARE HOLDER’S DIRECTORS”.

Shares were allotted to employees too under preferential quota and financial assistance also was extended to them in order to silence them.

Term lending and mutual fund institutions like ICICI, IDBI and UTI became commercial Banks through reverse merger process.

Private Banks were introduced so as to create a competition with the PSBs but also to create a scene to compare the products of the private banks with the PSB products.

Experienced employees who were the committed & involved members of the organised trade unions were encouraged to go out in the name of SVRS.

Embargo was employed in recruitment in the banking sector from 2000 onwards despite the PSBs were increasing their business and presence exponentially.

Banking functions were linked to the capital in the guise of implementing Basel norms.
New accounting standards were introduced which brought a new nomenclature NPA and provisioning norms were introduced.

Using the two strings NPA and PROVISIONING NORMS, the declaration of the net profit by PSBs were controlled.

After blocking the rich capital possessed by the PSBs towards manufactured NPA, business of the PSBs were restricted in the name of inadequacy in capital.

Illogical and illegal decision of “non infusion of capital” to the under performing Banks was announced.

Governance struc
ture of the PSBs were changed by nominating the non executive Chairman and by appointing MD & CEO from the private sector.

PSBs were instructed to consolidate the bad debts in the name of STRATEGIC DEBT RESTRUCTURING and in the process banks were discouraged to initiate even the normal recovery process. Besides, the banks were encouraged to extend additional funds to such corporates whose liability was restructured to show performing assets.

Suddenly initiated the process of Asset Quality Review by the RBI which is totally against the functional autonomy being now enjoyed by the PSBs, and arm twisted the performing banks to declare loss by making huge provisions towards such accumulated bad debts.

Openly declared through Gyan sangam the division of banks as Acquirer and target banks based on their assets.

Share prices of the PSBs were reduced to rock bottom and announced to dilute the Govt. holding to 52% - an orchestrated drama to hand over the public sector to the private hands at cheap price.

It is a well drafted drama enacted by the Government over a period of 25 years excellently stage managed by the controllers of the Banking Industry and also with the special appearance of committees in the name of Industry experts..

I was wondering where and who wrote the script till I came across a research study by the scholars of of Malaysian university whose report is reproduced below.

They have listed the various steps initiated by the Britain during their successful execution of privatisation by Madam Margaret Thatcher.

You will be able to understand the similarity, when compare the highlighted portion of both the parts


Ali Abusalah Elmabrok Mohammed 1,*, Ng Kim Soon2, Abdalla Ab Sinusi Saiah3 & Abdul Talib Bin Bon4
Faculty of Technology Management, Business and Entrepreneurship
University Tun Hussein Onn Malaysia, 86400 Parit Raja, Batu Pahat, Johor, Malaysia
Tel: 60-127682709 E-mail:


From all the accumulated experience of privatization, new results have been added to the outcome of international experiences in this area, as these experiences are worthy of study so as to avoid the negative aspects and follow the positive aspects in the implementation of future privatization projects , but the majority of findings suggest the
importance of taking the circumstances and the local variables of economic, social, political and legal into account when preparing the strategies of privatization and their implementations, as there are inferred global indications which show that the experiences of privatization cannot transfer its entirety from one country to another, and this paper focused on a number of international experiences in the privatization program for the countries that differ in its economic, and vary in the variables of political and social REO , in the periods of the privatization program, with particular reference to the Egyptian experience.


There have been many terms in recent times to express the process of converting some production units (at the national level), the scope of the public sector to the scope of the private sector, notably the privatization and privatisation, expropriation and other public. But it is more common in these terms of use is privatization, a term used in this study, and has appeared numerous definitions of privatization, some say that it's as a transfer of ownership of the project from the public sector to the private sector. In another definition refers to privatization "convert public property to the private sector, the management or rent, or share or buying and selling in what follows the State , in the various sectors of economic activity or area of public services." In the last definition is seen "as a process of transfer of ownership and operational management of the state-owned enterprises to the private sector, either in part or in full, and the private sector can be either institutions or businessmen or foreign companies.

In another definition refers to privatization "transfer of ownership of public facilities to other parties that you manage, in accordance with the principles of the private business sector, indicates that the definition of three to privatisation is to increase the efficiency of the management and operation of public projects by relying on market mechanisms and arrangements to get rid of bureaucracy.

Experience of privatisation in Britain: 

Characterised by the British experience in successful privatisation, since it began with the Conservative government led by Margaret Thatcher, that the reasons for success had gathered, namely, at the first beginnings in this area, so are actually the pilot experiences in terms of the configuration of legislative, political and economic relations with the reforms in the market securities and tax structure, then the inclusion of privatisation of all sectors of national economy of goods and services, which focus on the promotional efforts:

• Use of media campaigns and advertising-intensive sectors, each addressed to the target market (people - investors - employees - managers - official bodies - political leaders and society); in order to convince them and encourage them to the feasibility of privatisation.

• Take-out in the method of privatisation, in order to give opportunity to the efforts of public relations, publishing, media and personal selling, advertising and publicity Impact to occur.  

• Focus on the quality of the product in the issues of privatization, since the focus is on winning institutions in each sector, to be converted typically, to be an example to the rest of similar institutions.  

• Focus on the attraction and strategic partnership for investors and citizens, managers and employees, and founders of companies, to expand the ownership base, as follows: 

1. Encourage the State of the founders in the first place to buy a share of the state of the stock or part of it.  

2. Encourage managers and employees by giving them priority in buying shares, or give them shares compared to their share in the profits or reducing their eighth stock, or give them an incentive to buy, or give talented employees free shares for being with primary responsibility for the continuation of their giving to the company, develop and duplicate (giving clear advantages for employees).  

3. Encourage investors to buy shares by giving them full information and truthful shows in the trend of the real opportunities for profitability in the companies offered for sale.  

4. Reduce the value of the shares or instalment price or to give priority to requests from small contribution. 

5. Restrictions on foreign investors in the privatisation process, by demanding enrolment in the register of foreign shareholders in the State, and not to increase the share of foreign investors for 15% of the total shares of the company, with no foreign participation in the Board of Directors. 

• Keep the government paced specially called golden share in the privatised company, which is entitled to attend the General Assembly, voting, and the appointment of a representative of business in the Governing Council, and also have the right to object in cases of emergency on some decisions, and this gives a reliable picture of the citizen because the companies privatised operating state in order to monitor the public interest, without prejudice to the rights of deliberate investors and shareholders.  

• Change managers in the public institutions in the state, opponents of the privatisation or either transfer them to alternative employment in the privatised institutions or to resolve these institutions, they lose their jobs.

• Supervised by the Minister of Finance on all privatisation processes in collaboration with relevant ministries, devise and approve guidelines for privatization, and the details of the technical operations, leaving the work of specialists from banks and financial intermediaries, lawyers and accounting firms, which widens the circle of strategic partnership in the privatization. 

• Political support for the ruling party and the government and ministries of privatisation reflect the strength of the supportive influence of the direction of privatisation.
So, our Government has executed the long drawn agenda of Privatisation through Mergers and Acquisitions which would demoralise the work force and who would ultimately succumb to be placed in the hands Private.

Let us wake up,

An awareness campaign must be launched to awake the public too, as primarily, the privatisation will have negative impact on the fellow country men and Country’s economy.
Let us effectively communicate to the Indian public that the privatisation of Banking sector is an anti – national move which would drive the rural economy back to the primitive.
Every individual officer must take it as a mission not only as a bank officer, but also an individual interested in our Mother India’s wealth and welfare.

Thanking you,

 RBI Governor Raghuram Rajan has said the issue of bad loans gets “loaded with a lot of morality” and it is necessary to keep criminal liability separate to put stressed assets back on track.

It is not a point whether defaulters are good people or bad people , whether the company is big or small, whether is popular or unpopular etc.

Questions are asked whether non-performing assets (NPAs or bad loans) were a concern for him given that some “big names and big companies” are linked to the problem.
The Reserve Bank Governor made it crytal clear that  the NPA clean-up is simply about whether the loan is “performing or not performing.

There may be good reasons or bad reasons behind a Non -performing asset.It may have become non-performing simply because someone had terrible luck or somebody else’s fault. Sometimes licences are cancelled , sometimes approvals are given to company by statutory bodies in time, sometime one of partners or directors do not perform or commits blunder , commit fraud or sometime divert the fund of the firm for self use or for different use and so on. There may be all sorts of reasons why companies get into trouble.

MR. Rajan said clearly , "if companies get into trouble, the loan becomes a non-performing asset and “we very much want these assets to be back on track,”

It is a completely separate issue of who to blame and whether there is criminal liability involved in a NPA account or with some defaulting firm. In a fraction of the cases there may be criminal liability involved. That should be separated from the whole issue of putting the assets back on track.

Asset is not a criminal.  Asset can produce value and can function. Asset should be allowed to produce value even while there is a separate case going on if there was criminal activity involved.

Rajan emphasised that the government has said very clearly it will not interfere in the process of granting loans and “I think that is a very important development. The next stage has been on trying to improve the administrative structure in the banks.”

Rajan said the last part of the stabilisation agenda has been to clean up the stressed assets in the banking sector in order to ensure banks have the room to lend again.

Rajan has said it clearly and without any ambiguity that we want to have our banks get their money back. For that we need a proper bankruptcy system, a court system that functions in finite time and we didn’t have that in the past.

He expressed hope that “there is a reasonable chance” that the bankruptcy code bill will be passed soon and that it will ensure a fully functioning system.

Under bankruptcy code banks and borrowers  can renegotiate outside of bankruptcy. Newly framed bankruptcy code keeps you from getting away with too much either on the banking side or the promoter side.

Number of frauds in banks has been rising quarter after after, year after year. Many cases of frauds are not even reported to RBI or reported with inordinate delay. RBI has said clearl that banks have to make provision for the entire amount of a loan in transactions where fraud has been detected in a period not exceeding four quarters.

Sometimes banks feel that  if huge provisions are done in a quarter it may adversel affect the finacial report of the bank and are afraid of erosion in image of the bank and its stock value.  To smoothen the effect of such provisioning on quarterly profit and loss, banks have the option to make the provisions over a period, not exceeding four quarters, commencing from the quarter in which the fraud has been detected.

RBI said that the banks have to make suitable disclosures with regard to the number of frauds reported, the amount involved in such frauds and the quantum of provision made during the year. This tight and hard instruction will in the long run change the dirty culture of bank officials who in order to save their employees from criminal actions conceal cases of fraud. It is important to say here that the culture of hiding evil acts of an employee who commit fruad like crime lead to escalation in volume and value of such frauds.

Banks must scrupulously adhere to the extant guidelines on classification and reporting of frauds. It is in overall interest of the bank and the country as a whole.

Corporate debt worth $178 billion at default risk: BNP Paribas
A whopping 16.1 per cent or USD 178 billion worth of corporate credit in India is at risk of default, making the domestic banking system the worst in Asia in terms of bad loans.

According to the report by French financial services major BNP Paribas, of the total bank credit of USD 1,109 billion in the country, corporate debt worth USD 178 billion, 16.1 per cent of the total bank credit, stands the risk of default.

India is followed by Indonesia and China with 7.2 per cent and 6.6 per cent of respective total bank credit at the risk of default.

While in Indonesia, USD 22 billion of its total bank credit of USD 305 billion is at potential risk of default, China stares at USD 1,050 billion of potential bad loans. The Chinese banking system is worth USD 15,884 billion.

The brokerage did not specify the time-frame of the report which is based on an analysis of 738 listed companies in Asia which have a combined gross debt of USD 1.7 trillion.

"Mounting corporate debt is one of the biggest problems for Asian economies," the report said.

"Our country-wise analysis highlights the following percentages of bank loans at risk:

6.6 per cent in China,

16.1 per cent in India,

5.8 per cent in Korea,

2.4 per cent in Thailand and

7.2 per cent in Indonesia,"

As per BNP Paribas, policymakers in every country are trying to tackle the debt problem in different ways. "Chinas solution seems to be a debt-to-equity swap. This was tried in China in the late 1990s," .

"The present instance, however, could be different...the government may not assume a significant part of the debt, as it did in the last instance," .

Indias approach is more direct as the "Reserve Banks asset quality review is forcing banks to acknowledge and write off stressed assets leading to severe short-term pain, particularly for PSU banks, but also potential long-term gain once bad loans are fully recognised,"