IDBI is 10th largest development bank in the world in terms of reach. It has opened 3203 ATMs, 1809 branches, including one overseas branch at Dubai, and 1343 centers, including two overseas centres at Singapore & Beijing. It is one of 27 commercial banks owned by the Government of India.The Bank has an aggregate balance sheet size of INR 3.56 trillion ( Rs356000 crore )as on 31 March 2015
Development Banking emerged after the Second World War and the Great Depression in 1930s. The demand for reconstruction funds for the affected nations compelled in setting up of national institutions for reconstruction.
At the time of Independence in 1947, India had a fairly developed banking system. The adoption of bank dominated financial development strategy was aimed at meeting the sectoral credit needs, particularly of agriculture and industry.
Reserve Bank concentrated on regulating and developing mechanisms for institution building. The commercial banking network was expanded to cater to the requirements of general banking and for meeting the short-term working capital requirements of industry and agriculture.
Specialised development financial institutions (DFIs) such as the IDBI, NABARD, NHB and SIDBI, etc., with majority ownership of the Reserve Bank were set up to meet the long-term financing requirements of industry and agriculture.
Formation of Industrial Development Bank of India (IDBI)
The Industrial Development Bank of India (IDBI) was established in 1964 under an Act of Parliament as a wholly owned subsidiary of the Reserve Bank of India.
In 1976, the ownership of IDBI was transferred to the Government of India and it was made the principal financial institution for coordinating the activities of institutions engaged in financing, promoting and developing industry in India.
IDBI provided financial assistance, both in rupee and foreign currencies, for green-field projects as also for expansion, modernisation and diversification purposes.
In the year 1991 our government adopted policy of reformation and liberlisation to meet Internatioal standards in banking. IDBI also provided indirect financial assistance by way of refinancing of loans extended by State-level financial institutions and banks and by way of rediscounting of bills of exchange arising out of sale of indigenous machinery on deferred payment terms.
IDBI was allowed to issue shares and accordingly it came with public issue in the eyar 1995. After the public issue of IDBI in July 1995, the Government shareholding in the Bank came down from 100% to 75%.
IDBI played a pioneering role, particularly in the pre-reform era (1964–91), in catalyzing broad based industrial development in India in keeping with its development banking charter as prescribed by Government of India.
Some of the institutions built with the support of IDBI are theSecurities and Exchange Board of India (SEBI),National Stock Exchange of India (NSE), National Securities Depository Limited (NSDL), Stock Holding Corporation of India Limited (SHCIL),Credit Analysis & Research Ltd, Exim Bank (India), Small Industries Development Bank of India (SIDBI) and Entrepreneurship Development Institute of India.
Conversion of IDBI into a commercial bank
A committee formed by RBI under chairmanship of S.H.Khan recommended the development financial institution (IDBI) to diversify its activity to commercial bankig .
To keep up with reforms in financial sector, IDBI reshaped its role from a development finance institution to a commercial institution. With the Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003, IDBI attained the status of a limited company viz., IDBI Ltd.
Subsequently, in September 2004, the Reserve Bank of India incorporated IDBI as a 'scheduled bank' under the RBI Act, 1934. Consequently, IDBI, formally entered the portals of banking business as IDBI Ltd. from 1 October 2004.
The commercial banking arm, IDBI BANK, was merged into IDBI in 2005
Why Strike In IDBI Bank
The united platform of IDBI bank remained on four day strike from March 28 to March 31.
Dispute came to light when Finance Minister Mr. Arun Jaitley said in his Budget speech that the government will consider taking its stake in the bank to below 50% from the current 80%.
This news has created situation when bank staff decided to go for strike.These leaders claim that they have the support of 12000 employees. They say that they are against disinvestment plan of the government but the stake of the government should not go below 50%
Bank is already passing through critical phase due to stressed assets.
Leaders of trade union associated with IDBI have told clearly that they are against privatization plan. They want written assurance that the shareholding of the center in IDBI bank will remain at not less than 51% at all times as assured earlier on the floor of Parliament.
They also want that the wage settlement pending since November 2012 be implemented immediately.
AIBEA is protesting privatization of IDBI and merger plan for other banks. They say rise in bad debts is due to government, but they do not say why they did not protest misuse of banks by politicians and why did they not stop exploitation of bank by bank staff. They do not say why did they allow the loot of banks through bank staff for decades and why did they remain silent spectator of all evil activities. After all , top leaders of workman employees and that of officers union are also one of members of board of directors of each Bank.
I agree merger of banks is not the solution and I agree that privatization of bank is also not the solution to bank's problem. But I feel that even maintaining current status of government bank is also not the medicine to cure current health of public sector banks.
Mergar of Banks can only increase size of bank's volume of business but cannot change the heart and mind of bank staff and that of politicians who used banks to serve their self interests at the cost of common men.
Banks were nationalised in the year 1969 only to stop exploitation of poor people by promoters of private banks. And now the same government is inclined to handover government bank to private sector to stop exploitation of bank by the government and by government tagged bank staff.
Wine remains the same but bottle changes from time to time.
Culture of flattery by bank staff as well as by trade union leaders to bosses of banks to serve their self interest is root cause of sickness of banks.
It is leaders of trade unions like AIBEA, BEFI, AIBOC who have contributed a lot in loot of banks and in spoiling work culture. It is they who gave protection to dishonest staff at the cost of good staff. It is they who used power of unity and militancy of bank staff to blackmail management of each Bank and to serve their selfish motto only. These leaders could not even protect interest of their member staff because they slowly became flatterers of top officials of banks . These leaders jointly and severally looted banks in their own style and protected each other whenever their evil works got exposed.
Until there is change in attitude of bank staff and that of politicians we cannot dream of improvement of health of Banks, neither by keeping them as fully government bank nor by partial privatization of them.
We will have to stop malpractices from top to bottom in banks as well as in politics. Banks top bosses get success in their loot only by taking support of trade union leaders.
All top officials of every bank first try to please trade union leaders. They shut the mouth of these leaders by obliging them in various ways. When they get success in bringing leaders in their good book, top bank officers start acting arbitrarily and in looting it.
As such trade union leaders are as responsible and accountable as top bosses and politicians are responsible and accountable for ill health of banks.
If each staff , each officer and each trade union leaders become conscious of their duties towards their organization along with their rights , no power on earth can make banks sick. They could have built pressure on politicians to make legal set up stronger to recover dues from Bank loan defaulters. They could have stopped corrupt bank officers in selling promotion to flatterers. They could have stopped campus recruitment and arbitrarily allowing bank management to pay higher salary to freshers. And so on.....
Bank officers who are considered non performers by management of public sector government banks become star performers when they leave public banks and join private banks for making their career bright. Staff associated with government banks are as such not bad. But the corruption at higher level make and convert even good performer to become a bad performer or leave bank for other better job. Officers in public bank who do not act in support of top bosses and who are not flatterer to top bosses are forced to leave banks .
Trade union leaders should try to understand and make it clear to common men why after all bank officers become slave to higher bosses in public banks. They should tell the people why bank officers are more loyal to their bosses and not to their organisation.
Trade Union leaders associated with AIBEA or AIBOC should introspect and say why bank's health deteriorated year after year even though they had one member in boards of each bank to protect the interst of their staff members as also to that of the bank they represented.
Burden of Non Performing Assets in Banks is not cration of one or two years but it has been concealed for years and decades by clever corrupt officials to hide their evil works.
Bank staff are now put in the category of corrupt officials or non-performing officers .
Who are responsible for such pathetic condition of bank employees of public sector banks only?
Trade Union Leaders should say why asset quality of public banks is on decrease and facing continuous erosion whereas that of private banks is either getting improved or in control. Why profitability of public banks is facing problem and that of private banks is impressive always.
Trade Union Leaders should say why government is constrained to hand over the management of public banks to private sector bankers?
Banks were nationalised in the yar 1969 with a purpose to give relief to poor villagers, poor farmers and poor traders who were exploited by local moneylenders . Banks were nationalised to give relief to bank employees who were exploited by promoters of private banks and who wer forced to sit late hours and paid less salary compensation.
Trade Union Leaders should say why instead of protecting bank staff in particular and bank as a whole , they became yesman of top officials of management in allowing corruption in recruitment, promotion, lending, buying of goods and services for banks and in all types of works related to furnishing, renovation and taking over of premises for branches opened.
They should say why honest and good performing officers were transfered to critical places frequently and dishonest officers were given cream posting .
Misuse of power of transfering an officer or power of promoting and rejecting an officer in promotion processes used to take place by top officials always taking indirect support and concurrence of trade union leaders.
It is due to large scale corruption and rampant yesmanism at all levels that good officers and good clerks discarded promotion processes and thought it better to avoid taking higher responsibility on their shoulder. Bank management got absolute freedom to give promotion and to transfer an officer strictly as per their whims and caprices.
Trade Union Leaders used to give indirect support to heinous act of top managment . Now when health of banks has gone sick, these leaders shed Crocodile Tears and ask government not to privatise banks. At least they do not have moral to put such demand.
However ,I am also of strong view that Privatisation of banks which are now under public sector will be a disaterous act and there is no doubt to me that these private banks will prove to be more disasterous than present public banks are.
We should remember that in the year 1969 , the then government had to nationalise private banks only due to evil culture in private banks and with a purpose of accelerating social welfare works from governmnt banks. There is still need of social welfare work and government of India cannot ignore this pious work of social and financial inclusion. It is the duty of elected government to give all possible financial support to weaker section of the society as per directive principles of Constitution.
And it is bitter truth that even aftr seven decades of freedom, governments of the past failed to improve financial condition of poor . Bitter truth is that even Today, more than 80 percent of population find if difficut to afford even adequate healthy food for their family.
Bank unions threaten strike on May 25
Business Standard 02.04.2016Bank unions have given another call for a nationwide strike on May 25 to protest against their long-held grouses of privatisation and reforms in the banking sector among other issues.
The All-India Banks Employees Association (AIBEA) has called for the day-long strike against the government's plans to privatise public banks and other reforms in the sector, including merger of smaller lenders.
Earlier this week, a section of employees and officers of IDBI Bank was on strike on multiple days to protest the Government's proposal to pare its stake in the lender to below 51 per cent.
"We will go on strike on May 25 in support of various demand, including make banking a fundamental right, strengthening public sector banks, against privatisation of public sector banks, adequate capital infusion in PSBs and stringent measures to recover bad loans," said AIBEA General Secretary C H Venkatchalam said.
The employees will also demand to declare wilful default of bank loan as criminal offence, publish list of wilful defaulters and a Parliamentary probe into the Vijay Mallya case, he said.
"More than the ownership issue, the top-most issue today is the alarming increase in bad loans in the banks which is threatening to topple the entire banking sector."
The union claims it has over 5 lakh bank employees as its members
About 90% employees joined strike, says IDBI Bank union -Economic Times 02.04.2016
IDBI Bank employees association demanded that their four-day strike protesting the plan to privatise the bank received support from across the board and 90% of employees joined it despite the management's effort to foil it.
"Despite all sorts of threats by the management and coercive measures, nearly 90% of the officers and employees of the bank participated in the four days of strike," said Jagannath Raymandal, co-convenor of United Platform of IDBI Bank Unions.
Read more at:
http://economictimes.indiatimes.com/articleshow/51651504.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
Auditors and inspectors are appointed by RBI to audit accounts of every big branch and submit report on various parameters including window dressing in their final report . But unfortunately , these auditors as usual are also greed of gifts and free hospitality and hence when they are given warm welcome , they turn blind eye on all evil acts of branches . They are also bothered of getting exorbitant audit fee without actually doing job equivalent to fee they receive for auditing. It is they who certify the correctness of classification of assts and cacluation of profits even though there are many lapses,manipulations manipulations, deficiencies and shortcomings in accounting of the branch.
http://economictimes.indiatimes.com/articleshow/51651504.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
It is lack of understanding of media men that they have concluded that bankers are refraining from window dressing. Persons who are associated with bank know it very well that it is the cuture of bankers to use window dressing to achieve the set target and to misgude their mentor ministers.Bankers increase deposits, advances, and profit by window dressing and reduce Non Performing assets by using tools of restructure and evergreening of loan. This culture is deep rooted and bankers cannot sleep without using tools of window drssing to inflate their business artificially and get promoted.
Every year Government of India and RBI issue guidelines to Chiefs of banks to refrain from window dressing and every year bankers use window dressing in clear defiance of guidelines .Neither Government is intersted to ensure compliance of its guidelines, nor are the bankers afraid of non-compliance . This is why figure of total business rises abnormally in the month of March every year and fall down sharply in the month of April. It will be proved this year too as soon as figure of first fornight of April is compard with that of last dayy of March 2016. Basically it happens so in every quarter of the year but not to large extent , only to a small extent.
Auditors and inspectors are appointed by RBI to audit accounts of every big branch and submit report on various parameters including window dressing in their final report . But unfortunately , these auditors as usual are also greed of gifts and free hospitality and hence when they are given warm welcome , they turn blind eye on all evil acts of branches . They are also bothered of getting exorbitant audit fee without actually doing job equivalent to fee they receive for auditing. It is they who certify the correctness of classification of assts and cacluation of profits even though there are many lapses,manipulations manipulations, deficiencies and shortcomings in accounting of the branch.
Banks stay away from Window Dressing to Grow Their books -DNA 04.02.2016
The credit growth figures released by the Reserve Bank of India (RBI) on Wednesday showed that the credit growth for Indian banks during the fortnight ending March 18 showed a slight rise of just Rs 29,140 crore to Rs 72,77,650 crore, with most of the growth coming from the retail sector, and a tepid growth in the corporate book.
This fiscal-end, banks have refrained from taking one-day deposit or one-day credit as they shift their focus from balance-sheet expansion to the management of bad debt.
While the non-performing assets (NPAs) are expected to be high, banks are expected to reap huge treasury gains as they will be able to write back depreciation on the investments and also book profits with the yields on the government securities falling by 0.30% in the quarter. According to the estimates by rating agency Icra, gross NPAs is likely to increase from Rs 4.5 lakh crore (6% as on December 31, 2015) to increase to Rs 4.8-5.3 lakh crore by March 2016.
While the non-performing assets (NPAs) are expected to be high, banks are expected to reap huge treasury gains as they will be able to write back depreciation on the investments and also book profits with the yields on the government securities falling by 0.30% in the quarter. According to the estimates by rating agency Icra, gross NPAs is likely to increase from Rs 4.5 lakh crore (6% as on December 31, 2015) to increase to Rs 4.8-5.3 lakh crore by March 2016.
Government to tighten screws on banks' "window dressing" of accounts -4th June 2015
The government is set to overhaul annual targets for public sector banks this month, ending a focus on size that has long encouraged banks to inflate their loans and deposits at the year-end to hit growth objectives.
Banking and government sources said the new targets, to be discussed at meetings with top state bank officials this month, would focus on efficiency, with objectives set around return on assets, or return on equity, and controlling bad debts.
The shift, the government hopes, will also put a stop to widespread "window dressing" of state banks' financial accounts at the end of the fiscal year, the time at which the health of their balance sheets is officially assessed.
Banking and government sources said the new targets, to be discussed at meetings with top state bank officials this month, would focus on efficiency, with objectives set around return on assets, or return on equity, and controlling bad debts.
The shift, the government hopes, will also put a stop to widespread "window dressing" of state banks' financial accounts at the end of the fiscal year, the time at which the health of their balance sheets is officially assessed.
Read more at:
http://economictimes.indiatimes.com/articleshow/47544021.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
http://economictimes.indiatimes.com/articleshow/47544021.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
Window Dressing in Public Sector Banks -15th June 2015 by Danendra Jain
An Appeal to Government of India on Window Dressing
From time to time RBI and Government of India have asked and advised public sector banks to refrain from window dressing in deposits and advances. Still bank officials indulge in window dressing every quarter and this has been happening for decades. Window dressing is nothing but artificial inflating of business and reduction of stressed assets.
Bank officials inflate deposits in the last week of quarter or year and the same comes down in the first week of next quarter or year . Similarly they inflate figures of advances in the last week and get appreciation and awards from their bosses and from Ministers. This results in undue award to non performers and unjustified punishment to real performers.
Similarly on the front of bad assets and stressed assets, bankers hide bad assets by using the tools of rephrasing, restructuring and through evergreening of loan processes . Due to this timely action is not initiated against defaulters and during this time , defaulters disposes off the assets and then pray for compromise settlement or write off of the dues. In this way Recovery from defaulters is adversely affected.
Ultimately it is the government of India which has to suffer. It is taxpayers money which is infused in bank to protect them from falling due to mismanagement of bank officials or due to exploitation of banks by politicians. I add politicians because it is they who have been misusing banks for political advantages during each government in some way or the other. It is politicians who have damaged the banking culture.by their ill motivated advices and by suggesting writing off of loan for political gain.
Will you act against who have indulged in window dressing in the quarter ended June 15 despite your instruction not to do so in the same month?
It is important to say here that GOI can make real plan based on real figures only and similarly bank can recover bad money only if they take timely action.
Lastly I may add here that banking is a service industry and one cannot judge the performance of any individual based on figures. There are several Branch Heads or Bank heads who achieve the targeted figure somehow or the other but the customers of the branch and bank are not happy with the service extended .It may be these achievers who have added major portion of bad assets in their bank.
Here I would like to give an illustration TO substantiate my views. Suppose I am Branch Manager of a branch or Chief of a bank. I indulge in bribe based lending and achieve the advance well in advance. Then I use a little part of the ill earned money to buy deposits from government departments and public sector undertakings who have surplus funds and who can keep bulk deposits in my branch or in may bank, I can achieve and surpass even the target set for deposits. In this way I will be considered as good performer by my bosses, I will earn cash incentive and get quicker promotions. On the contrary those who have lagged behind the target or who have contributed lesser business by good means and by extending best services to customers may be rejected in cash incentives and in career.
But in the long run, advance made by me may become bad assets and cause huge loss to bank and force bank to arrange for larger capital. Customers may be dissatisfied with services extended from my branch because I focused on only few high value customers and neglected common men .Growth achieved may not be long lasting and stable. On the contrary , a person who did quality lending and who focused on retail business did the best for the health of the bank .His advances may remain standard healthy for years and decades. Bank may earn consistent income from such quality lending .
Future of bank depends not on figures but on quality of service it extends. Good culture is more important than good figures a bank achieves. Respect and recognition of real good performers can only help in giving permanent growth and consistent profit to a bank or a branch. Similarly wrong lending to achieve the target may give some temporary relief to political masters for temporary period but in the long run even persons like Devi Lal , V P Singh, Janardhan Pujari or Chidambram who promoted Loan Mela or Loan waivers used for for vote gain were rejected in election by voters. IN the same way bank officials who resort to evil means to achieve the target are trapped in corrupt dealing sooner or later or punished by almighty GOD in later part of life.
A Student who passed the examinations of his life by using unfair means may not necessarily get success in real life. A person may get job by using unfair means may be rejected by employer in short period. A bank may book inflated profit and book higher growth in business by using window dressing and by concealing stressed assets but sooner or the later the bank is exposed and subjected to hard medicine and surgical operation to survive or merged with some other bank . Unfair means in any sphere of life has bad outcome . There is no substitute to truth and real growth .
Stressed assets or Non Performing Assets in Banks are like tumour in body of a person. If the Doctor considers it as insignificant in early stage or do not diagnose it , it my grow and if the same is not removed by medicine or by surgical operation in initial stage it may turn into cancerous disease and cause huge loss leading to ultimate death of the patient. Similarly a person in intoxication of wine acts like lion and start driving his car in high speed and without control. If the power attained by wine is considered as good it may result in fatal accident. In the same way growth attained by window dressing is unreal power and unreal growth and result in accident in future.
From time to time RBI and Government of India have asked and advised public sector banks to refrain from window dressing in deposits and advances. Still bank officials indulge in window dressing every quarter and this has been happening for decades. Window dressing is nothing but artificial inflating of business and reduction of stressed assets.
Bank officials inflate deposits in the last week of quarter or year and the same comes down in the first week of next quarter or year . Similarly they inflate figures of advances in the last week and get appreciation and awards from their bosses and from Ministers. This results in undue award to non performers and unjustified punishment to real performers.
Similarly on the front of bad assets and stressed assets, bankers hide bad assets by using the tools of rephrasing, restructuring and through evergreening of loan processes . Due to this timely action is not initiated against defaulters and during this time , defaulters disposes off the assets and then pray for compromise settlement or write off of the dues. In this way Recovery from defaulters is adversely affected.
Ultimately it is the government of India which has to suffer. It is taxpayers money which is infused in bank to protect them from falling due to mismanagement of bank officials or due to exploitation of banks by politicians. I add politicians because it is they who have been misusing banks for political advantages during each government in some way or the other. It is politicians who have damaged the banking culture.by their ill motivated advices and by suggesting writing off of loan for political gain.
Will you act against who have indulged in window dressing in the quarter ended June 15 despite your instruction not to do so in the same month?
It is important to say here that GOI can make real plan based on real figures only and similarly bank can recover bad money only if they take timely action.
Lastly I may add here that banking is a service industry and one cannot judge the performance of any individual based on figures. There are several Branch Heads or Bank heads who achieve the targeted figure somehow or the other but the customers of the branch and bank are not happy with the service extended .It may be these achievers who have added major portion of bad assets in their bank.
Here I would like to give an illustration TO substantiate my views. Suppose I am Branch Manager of a branch or Chief of a bank. I indulge in bribe based lending and achieve the advance well in advance. Then I use a little part of the ill earned money to buy deposits from government departments and public sector undertakings who have surplus funds and who can keep bulk deposits in my branch or in may bank, I can achieve and surpass even the target set for deposits. In this way I will be considered as good performer by my bosses, I will earn cash incentive and get quicker promotions. On the contrary those who have lagged behind the target or who have contributed lesser business by good means and by extending best services to customers may be rejected in cash incentives and in career.
But in the long run, advance made by me may become bad assets and cause huge loss to bank and force bank to arrange for larger capital. Customers may be dissatisfied with services extended from my branch because I focused on only few high value customers and neglected common men .Growth achieved may not be long lasting and stable. On the contrary , a person who did quality lending and who focused on retail business did the best for the health of the bank .His advances may remain standard healthy for years and decades. Bank may earn consistent income from such quality lending .
Future of bank depends not on figures but on quality of service it extends. Good culture is more important than good figures a bank achieves. Respect and recognition of real good performers can only help in giving permanent growth and consistent profit to a bank or a branch. Similarly wrong lending to achieve the target may give some temporary relief to political masters for temporary period but in the long run even persons like Devi Lal , V P Singh, Janardhan Pujari or Chidambram who promoted Loan Mela or Loan waivers used for for vote gain were rejected in election by voters. IN the same way bank officials who resort to evil means to achieve the target are trapped in corrupt dealing sooner or later or punished by almighty GOD in later part of life.
A Student who passed the examinations of his life by using unfair means may not necessarily get success in real life. A person may get job by using unfair means may be rejected by employer in short period. A bank may book inflated profit and book higher growth in business by using window dressing and by concealing stressed assets but sooner or the later the bank is exposed and subjected to hard medicine and surgical operation to survive or merged with some other bank . Unfair means in any sphere of life has bad outcome . There is no substitute to truth and real growth .
Stressed assets or Non Performing Assets in Banks are like tumour in body of a person. If the Doctor considers it as insignificant in early stage or do not diagnose it , it my grow and if the same is not removed by medicine or by surgical operation in initial stage it may turn into cancerous disease and cause huge loss leading to ultimate death of the patient. Similarly a person in intoxication of wine acts like lion and start driving his car in high speed and without control. If the power attained by wine is considered as good it may result in fatal accident. In the same way growth attained by window dressing is unreal power and unreal growth and result in accident in future.
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