Monday, June 2, 2014

Government OR CVC Should Not Look Into Banker's Corruption

Finance Minister Arun Jaitley to meet PSU bank CEOs on June 10 -
Economic Times  ( See my opinion below)

MUMBAI: When B.K. Batra, deputy managing director of IDBI Bank was to be promoted chairman of a state-run bank, a Central Vigilance Commission note stalled it. What was his crime? He did not ensure due diligence on farmers in a loan sanctioned to a company that was in contract farming. 

Bankers know that nothing can be more flimsy than this because the same account is just a bad loan for every other bank. But no one is affected since no officer associated with it is due for a promotion.


The norms and style of functioning of the CVC not only harms officers, but also hurts institutions. United Bank of India which shocked the financial markets with record bad loans and saw the exit of chairman is headless for more than three months, thanks to CVCs dithering in clearing M.K. Jain, executive director at Punjab & Sind Bank for the job. 

State-run banks' worst fear is not bad loans, or an economic slowdown, but the fear of gumshoes who threaten careers unlike the politicians who just seek favours. When they meet the new Finance Minister Arun Jaitley on June 10, they would seek to end the terror of the CVC, additional capital, and level playing field with other financial intermediaries. No banker says that they should have a free run, but demand a reasonable approach. 

"CVC should give an employee or the officer a chance to present his case if they receive complains against him," said D. Sarkar, a life time banker and a former chairman and managing director at Union Bank of India "For small cases they should empower the board of concerned bank or form a committee comprising bankers to look into the matter. These will help in closing the CVC cases faster and boost confidence." 

The change of government may be among the best opportunity for the state-run banks to change the relation between the shareholder and the enterprise as government-owned banks have been treated as a ward of the state. 

About 9.2% of the banking systems loans are stress loans as on March 2013. This Rs 193,200 crores as bad loans another Rs 229013 crores are restructured loans, some of which may turn bad. To recover these loans they expect the government to set in order the debt recovery tribunals. 

Many of the tribunals are understaffed and defaulters exploit a system that has many legal loopholes even after the Reserve Bank of India has attempted to tighten the system. 

"More DRTs should be set up," said M.V. Tanksale, chief executive at Indian Banks' Association, the lobby group. 

Furthermore, banks weakened by the high bad loans, need capital to grow their business. It becomes imperative that they are adequately funded so that the economic recovery happens. 

According to RBI estimates state-run banks need Rs. 4 lakh crores of capital in the next three years to meet the regulatory norms which is known as Basel III rules, the central bank has forecast. The Government alone have to bring in Rs 12,000 crores if  it has to maintain controlling stake in banks. 

But given the weak government finances, the state man not be able to fund the banks which may lead to it reducing its stake in lenders which could also improve their autonomy. 

A panel appointed by the RBI under P.J. Nayak has recommended many measures including professionalising of the state-run banks and state owning less than 51%. 

"Government could provide more capital to banks since the banking sector is passing through a .. 

To read more use following link


Link Economic times


What I Feel is as follows:

Top Bankers want that government should not look into their corruption and stop CVC and CBI to make inquiries into their unfair deals in lending decisions. They mean to say that bad debts are rising not because they were negligent and ill-motivated in sanctioning loans , they mean to say that they are fully honest and did not indulge in bribe based lending and they mean to say that it is only due to interference of CVC , they lost enthusiasm to take decisions in loan proposals. 

Who will believe it? Only politicians who are shareholders in corruption can understand the pain of bankers and accept their hidden agenda.

Private banks are flourishing but pubic sector banks are contributing more and more Non Performing Assets . Still top officials of the PS banks are not ready to accept that their bad lending and bad monitoring have only resulted in accumulation of stressed assets..Yes there are other hurdles like legal constraints also which cause delay in recovery from willful defaulters. Yes it is also true that politicians are exploiting banks for their vested interest. But none can deny that corruption in banks at top level has polluted culture down the line in the same way as ministers have polluted culture in administrative system all over the country. 

Now when bankers are getting exposed, they are approaching Finance Minister to stop CVC and CBI making inquiry and investigation into actions and intentions of corrupt bankers.Thieves are asking police officers to shut their eyes when they act. 

I simply ask government of India and Finance Minister to order assessment of wealth of all CEOs and top ranked officers who have retired during last ten years .The finding of such assessment will make it crystal clear whether bankers indulged in corrupt practices or not. 

It will also make it clear whether CVC and CBI are real hurdles in the path of honest lending . It will also expose the bad intentions of politicians who ruled over banks during last ten to twenty years. It will make it clear how bankers and politicians together raped honest and talented officers in the name of merit oriented recruitment and promotion policies.

Not to speak of CEOs of bank, even assessment of top executives will tell how much deep rooted corrupt culture has damaged the fundamentals of banks and why honest officers are not getting elevated in public sector banks. Honest investigation of promotion process which took place during last ten to twenty years will tell how flatterers and bribe earners got promotions at the cost of good and devoted performers. 

Last but not the least if bankers are afraid of CVC and CBI and if they want to get rid of CVC and CBI inquiry , why  politicians and other administrative officers should face the inquiry from CVC and CBI when they are found indulged in corruption. It means the structure of CVC and CBI and all anti corruption bodies should be dismantled.Government of India after all cannot have discriminatory rules and laws.

Demand of time is to weed out corrupt officials to pave the way for honest workers  and devoted performers. For this purpose Government of India will have to ensure respect for honest performers and will have to remove discriminatory clauses in recruitment and promotion processes which empowers top officials to act as per their whims and fancies.Because it is only unregulated powers to top officials which has made officers corrupt and which has resulted in a culture which promotes only flattery and bribery .Government of India will have to make laws strict and nondiscriminatory so that honest officers like Ashok Khemka are not bought to task .



It is also true that in some stray cases good officers are also trapped on flimsy ground and denied their right in promotion.But it does not mean that all cases of corruption should be out of lens of CBI and CVC. After all it is public money which bankers are supposed to protect and hence they cannot be absolved of their responsibility only because of credit growth target they have to achieve.

Yes it is desirable that honest officers are not trapped on flimsy ground  by mischievous politicians and or mischievous CVC or officials of CBI. This is why I reiterate that rules and policies should be such which is more and more transparent and which does not permit corrupt officers to act as per his or her whims and caprices.We have to devise such methods which gives more justice to honest workers and which weed out dishonest officers to the best extent possible. We do not dream of ideally full proof system , but can dream of best possible system to ensure reign of justice 

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