Finance Minister while deliberating on Non Performing Assets in Public Sector Banks told that NPA ratio was about 14 percent in the year 2002 and came down to less than 2 percent in the year 2008-09 . But after that as he pleads NPA rose slowly due to economic slowdown to almost 4 percent in September 2013.
I wish to open his eyes or expose his concocted figures to present a rosy picture by saying that upto the year 2002 banks used to declare assets as bad as and when it became bad. But when new UPA government led by Congress Party came to power, the volume of corruption rose to new heights , game of manipulation broke all past records , bankers considered it better and safe not to declare any asset as bad despite all irregularities.
Branch Head or Regional Head or Zonal Head who added bad assets in balance sheet used to be fired, humiliated in open meeting by top officials, posted at critical remote place , rejected in promotion processes and finally punished . On the contrary officers who used to hide bad assets and who were clever in concealing bad assets to present rosy balance sheet used to elevated out of turn despite all charges of lapses, lack of monitoring and involvement in corruption.
Above mentioned bad culture continued till banks were forced by RBI to classify assets strictly as per system i.e. as per technology driven CBS system. Banks were forced to stop manipulation due to introduction or Core Banking Solution. In the era of developed technology also, clever bankers did not declare all bad assets in one time , they manipulated with the CBS system also on one plea or the other , they tempered with the CBS system too and in this way they slowly and in a gradual manner declared bad assets which resulted in rise of NPA from less than 2 percent to more than 4 percent.
Still some banks are successfully hiding bad assets. When all banks will honestly declare all assets as bad strictly as per system and when they will stop restructuring of bad accounts on flimsy ground, there is no doubt that the volume of NPA will again rise from 4 to 24 percent. There is no doubt in it. Still there are many such branches and Regions in almost all PS banks where NPA ratio is more than 25 % and even more than 50 and 75 percent.
A bad asset is declared bad only when the sanctioning authority of such bad loan and the real culprit is either promoted or retired safely. Top level officers who are really responsible and accountable for any account going bad either due to lapses in sanctioning or lapses in monitoring are never punished, rather they are awarded with promotion . And this is why bad culture is inculcated and there is no power on earth which can control or stop rise in bad assets without taking course of manipulation.
FM has told in the meeting that top 30 bad accounts are under scanner and he told the same sentence almost a year ago but failed to punish a single top ranked officer during this period. It is worthwhile to mention here that high value loans are sanctioned only by top officials and when they themselves are to assess the accountability, they will never dare expose their own crime.
As such it is desirable to put top 30 officers of each bank and each zone under scanner and then only some improvement will take place and bad culture take a turn around. Otherwise the ministers will preach the sermon, as they are preaching in 2G scam or CWG scam or coal scam. They cannot dream of stop malpractices or dream of changing the bad culture of flattery and bribery until they become daredevil to punish the top and they learn to say spade a spade.
It is also true and a fact that there may be some genuine reasons for some accounts going bad and when these reasons are beyond control of banker , government and the borrower,one may go for compromise or write off.
But when a Loan account goes bad due to wrong doings of banker or the borrower or the government machinery, the rise in bad asset becomes and must be a matter of serious concern.
As such it is the need of the hour to punish those bankers who due to their self interest allowed bad borrowers to enter into bank's balance sheet. It is the need of the hour for the government to reform the judicial and police system to stop delay in disposal of court cases and to expedite action against willful defaulters.And lastly if some Netas are involved and indulged in rise of bad assets and thus in looting the public sector banks, need of the hour is to put at least 30 ministers under scanner, their assets should be verified and compared with their all source of incomes.
There is no doubt that not only external reasons are always behind rise in Non Performing Assets of the bank, there are internal looters too who in disguise and who in the name of achievement of target are serving their self interest.Government should try to weed out such bad elements from banks, from legal system and from the government itself.
It is always to be kept in mind that looters always loot the bank in a very scientific way giving no scope or little scope for doubt to society and to his assessors.When a corrupt top officials promote a non performing and corrupt officer to higher scale , he does so after promoting some genuine persons too.
I however do not hesitate in appreciating the hard core positivism of honourable FM sri Chidambram and it is he only who at least understand the ground reality from the core of his heart and it is his desire to save all guilty including Netas and bankers that he presented a rosy picture. It is he who controlled the department of Home when he was Home Minister and it is he who did not allow any terror activity to take place during his tenure of Home Minister.If there is a will there is a way. If he really wants to bring down bad assets he can do so. Unfortunately he has failed to keep his own government blameless and scamless.
It is also true and a fact that there may be some genuine reasons for some accounts going bad and when these reasons are beyond control of banker , government and the borrower,one may go for compromise or write off.
But when a Loan account goes bad due to wrong doings of banker or the borrower or the government machinery, the rise in bad asset becomes and must be a matter of serious concern.
As such it is the need of the hour to punish those bankers who due to their self interest allowed bad borrowers to enter into bank's balance sheet. It is the need of the hour for the government to reform the judicial and police system to stop delay in disposal of court cases and to expedite action against willful defaulters.And lastly if some Netas are involved and indulged in rise of bad assets and thus in looting the public sector banks, need of the hour is to put at least 30 ministers under scanner, their assets should be verified and compared with their all source of incomes.
There is no doubt that not only external reasons are always behind rise in Non Performing Assets of the bank, there are internal looters too who in disguise and who in the name of achievement of target are serving their self interest.Government should try to weed out such bad elements from banks, from legal system and from the government itself.
It is always to be kept in mind that looters always loot the bank in a very scientific way giving no scope or little scope for doubt to society and to his assessors.When a corrupt top officials promote a non performing and corrupt officer to higher scale , he does so after promoting some genuine persons too.
I however do not hesitate in appreciating the hard core positivism of honourable FM sri Chidambram and it is he only who at least understand the ground reality from the core of his heart and it is his desire to save all guilty including Netas and bankers that he presented a rosy picture. It is he who controlled the department of Home when he was Home Minister and it is he who did not allow any terror activity to take place during his tenure of Home Minister.If there is a will there is a way. If he really wants to bring down bad assets he can do so. Unfortunately he has failed to keep his own government blameless and scamless.
Top 30 NPA accounts of PSU banks under government scanner: P Chidambaram--ET 22nd October 2013
NEW DELHI: Concerned over defaults by big borrowers, Finance Minister P Chidambaram today said the government is monitoring the top 30 NPA accounts in each PSU bank and asked the lenders to set up separate verticals to recover money from written-off accounts.
Talking to reporters after meeting the heads of PSU banks, the minister said he hoped that non-performing assets (NPAs) are a "function of economy" and would improve with the recovery in economic growth.
"We are monitoring the top 30 NPA accounts in each bank, each zone. It is a matter of concern that it is the big borrowers (with loans of over Rs 1 crore) who are defaulting," Chidambaram said.
The minister said the situation was not as bad as it was in 2000, when gross NPAs touched a high of 14 per cent. The NPAs, which plateaued over the years at about 2 per cent, have started creeping up with the deceleration in growth in the past few years.
As of June, the gross NPA of nationalised banks was 3.89 per cent and State Bank Group at 5.50 per cent.
Chidambaram said that like the State Bank of India (SBI), other PSU banks should set up separate verticals to recover as much as possible from accounts that were written off.
The minister, however, expressed satisfaction over credit growth by PSU banks in the first and second quarters of the current financial year and expressed hope that it will remain "satisfactory" in the remaining part of the fiscal.
Observing that there were some wilful defaulters, Chidambaram said, "The bulk of the people do not wilfully default. They default because of circumstances. Once the economy and cash flow pick up, they will pay."
The bulk of the NPA was from those who borrowed Rs 1 crore and more, he said, adding, "We have told them (PSU banks) to keep a very close watch on these largest accounts and have to recover the amount...recoveries are taking place, but not as much as I would like...I hope recoveries will improve."
Noting that defaulters often try to stop the recovery process, he said, "Banks have been advised to empower or set apart an officer of senior rank, at least of General Manager rank, to look at recovery, especially recovery from written-off accounts...We will try to recover as much as possible from the written-off accounts."
The banks, he said, can look to establish a separate vertical, as was done by SBI, to improve recovery from such written-off accounts.
Talking to reporters after meeting the heads of PSU banks, the minister said he hoped that non-performing assets (NPAs) are a "function of economy" and would improve with the recovery in economic growth.
"We are monitoring the top 30 NPA accounts in each bank, each zone. It is a matter of concern that it is the big borrowers (with loans of over Rs 1 crore) who are defaulting," Chidambaram said.
The minister said the situation was not as bad as it was in 2000, when gross NPAs touched a high of 14 per cent. The NPAs, which plateaued over the years at about 2 per cent, have started creeping up with the deceleration in growth in the past few years.
As of June, the gross NPA of nationalised banks was 3.89 per cent and State Bank Group at 5.50 per cent.
Chidambaram said that like the State Bank of India (SBI), other PSU banks should set up separate verticals to recover as much as possible from accounts that were written off.
The minister, however, expressed satisfaction over credit growth by PSU banks in the first and second quarters of the current financial year and expressed hope that it will remain "satisfactory" in the remaining part of the fiscal.
Observing that there were some wilful defaulters, Chidambaram said, "The bulk of the people do not wilfully default. They default because of circumstances. Once the economy and cash flow pick up, they will pay."
The bulk of the NPA was from those who borrowed Rs 1 crore and more, he said, adding, "We have told them (PSU banks) to keep a very close watch on these largest accounts and have to recover the amount...recoveries are taking place, but not as much as I would like...I hope recoveries will improve."
Noting that defaulters often try to stop the recovery process, he said, "Banks have been advised to empower or set apart an officer of senior rank, at least of General Manager rank, to look at recovery, especially recovery from written-off accounts...We will try to recover as much as possible from the written-off accounts."
The banks, he said, can look to establish a separate vertical, as was done by SBI, to improve recovery from such written-off accounts.
Set up separate verticals to recover technically written-off accounts, Chidambaram tells banks
NEW DELHI, OCT. 22:
Rising non-performing assets (NPAs) or bad loans in the banking system have prompted the Government to turn the heat on public sector banks (PSBs) to improve their loan recovery mechanism. It also said that top 30 NPA accounts of each bank were being closely monitored
Concerned about the NPA situation, Finance Minister P. Chidambaram on Tuesday directed PSBs to set up a separate vertical or division for recovery of technically written-off accounts.
Such a vertical would be headed by an official of General Manager rank, Chidambaram told newspersons after a three-hour meeting with chief executives of public sector banks in New Delhi on Tuesday.
This is the first time banks have been asked to come up with a dedicated vertical for recovery of technically written-off accounts, a banker who attended the meeting, said.
Already, PSBs have recovery cells, but not a dedicated one for technically written-off accounts, a banker pointed out.
“We will look at the Finance Minister’s suggestion on a separate vertical for technical write-off accounts and implement it in true spirit,” S. L. Bansal, Chairman and Managing Director, Oriental Bank of Commerce, told Business Line.
The total technical write-offs in the banking system
as of June-end 2013 stood at about Rs 83,000 crore.
‘PURE PROFITS’
Chidambaram pointed out that it was important for banks to focus on recovery of technically written-off accounts as every rupee recovered from such write-offs was “pure profits” for banks. He urged PSBs to ensure that their write-offs were not more than their recoveries.
In the case of six banks — Indian Overseas Bank
, Indian Bank, Bank of India, Bank of Maharashtra,
Union Bank of India and Syndicate Bank — the
write-offs have been more than their recoveries
during the quarter ended June 2013.
The current difficult situation on the NPA front is the result of a slowdown in the pace of growth of the economy, Chidambaram said.
Large borrowers, (who borrow above Rs 1 crore), account for bulk of the NPAs, he pointed out.
“I have asked banks to keep a close watch on large accounts and also go after wilful defaulters.”
Chidambaram also noted that bulk of the people do not wilfully default and are likely to repay if the economy picks up.
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