Other reasons cited by Mr. Rajan were laxity in credit risk appraisal and loan monitoring in banks and lack of appraising skills for projects that need specialised skills resulting in acceptance of inflated cost and aggressive projections. Besides, he also listed wilful default, loan frauds and corruption in some cases among the key reasons.
Rajan is however giving more emphasis on false reasons for present sickness of PSU banks. He has stressed overall economic slowdown responsible for sky balooning volume of bad debts in PSU banks. He is not different from political leaders in saving himself, saving RBI and in saving Government of India from penal action for their absolute failure in keeping banks safe and risk free.
RBI chief Mr Rajan is trying to protect PSU banks from fixation of accountability by putting blame almost entirely on economic recession and other reasons which according to him are primarily responsible for escalation of Non Performing Assets in Banks and which according to him are beyond the control of the bank management.
All are birds of the same feather so far as accountability and fixation of responsibility for rise in bad debts in PSU banks is concerned. neither politicians nor administrative officials are ready to own the responsibility for critical health of PSU banks. I therefore disagree with views expressed by Mr. Rajan in support of PSU bank management .
On the one hand Government of Indha has been claiming for years and decades that India is growing irrespective of global slowdown and they claim proudly that GDP growth of India is the highest in the world, on the other hand they do not even hesitate in saying that economic sluggishness is responsible for rise in bad debts. When they talk of International economic situation, they say Indian economy is the best performer and when they talk of health of banks , they say that due to bad economic conditions, banks are sick.
On the one hand RBI Governor Mr. Rajan says India's growth story is unparalled and on the other hold economic slowdown is held responsible for failure of various projects and hence responsible for stress in banking assets.
It is important to point out here that under same economic and political environment, private banks have exhibited best performance, consistent growth in profit and reduction in bad debts. It is therefore a undeniable fact that politicians , administrative officials, legal officials and bank officials all work in their mutual interest and do not bother where the country is losing and where the common men are suffering due to their evil works and ill-motivated management of their misdeeds. Here I think it proper to say that sooner or the later private banks will also become victim of wrong policies and faulty system. And ultimately it is common men and taxpayer who will have to bear the brunt of faulty sstem.
RBI Governor Mr. Rajan further says that gross NPAs ratio had steadily declined from 15.7 per cent in 1996-97 to 2.36 per cent in 2010-11. And according to him the asset quality of the Indian banking system had again come under stress in the last couple of years, as a consequence of global and domestic economic slowdown. If his argument is accepted , then it may be said that economic condition of the country was the best during the period 96-97 to 2010-11 .If it was so, why then , the then government injected lacs of crores of rupees to stimulate the economy after 2008 financial crisis of USA and how did it fail to save the economy evn after distributing stimulating package as charity .
Why then the government is bent upon following the same policy of privatisation ,liberalisation and globalisation?
How the stimulous package of Indian government instead of containing the consequences of so called financial crisis aggravated it?
Why USA , wherefrom the crisis originated , got success in restoring the health of US economy and why India added fuel to fire so far as health of banks is concerned?
I fully disagree with views expressed by RBI Chief Mr. Rajan. .
Because on an average, ratio of NPA has never been less than 20% for PSU banks , rather it was much more even during ninties and during the period started from 2010-11. Only the difference is that upto 96-97 banks were to some extent honestly declaring bad debts . When bankers concealed bad debts, ratio appeared to be less and when they declared hidden bad debts as NPA, ratio grew slowly and gradually.
After words, the clever Ministers of Congress Government and RBI officials built pressure on Bankers to hide NPA and portary false and fabricated bright picture of banks so that Banks may get best response in proposed IPO of PSU banks. It is undeniably ture that under veiled instructions from GOI and RBI, Bank officials in general started concealment of NPA in the name of banking reformation and economic liberlisation. Any bank officer who dared treating bad assets as NPA had to face the music of transfers and humiliation in the hands of bosses.
In the meantime, banks progressed in technology upgradationn of banking transaction and maintainence of records. From the year 2007-08 onwards, banks slowly adopted Core Banking Solution (CBS) and started calculation of financial results and various ratios using advance technology. Later on, banks were instructed by none other than RBI itself ,that banks started work on identification of NPA using tools of advancd technology called as CBS . This is why ratio of NPA to total credit again started rising from 2010-11 onwards.
Banks however again cleverly used technology to hide NPA and declared bad debts as NPA in slow , gradual and arbitrary manner. This is why almost all banks have witnessed sharp rise in their NPA and in stressed assets . This is not the fact that NPA has grown during the period 2007-08 onwards, fact is that banks were willfully, fraudulently and stretegically concealing NPA to brighten thir balance sheet and they were doing so to conceal their evil works under the wrap of banking reform and on the excuse of 2008 US sub-prime Crisis.
I still say that if CBI or RBI or any agency carry out a forensic audit of each and every standard accounts of so called strongest bank namely SBI, it will become crystal clear to all agencies that SBI is the weakest bank among all government banks. Weakness of banks which are now called as weaker in public domain is that Chief of these banks were either not clever in fraudulently concealment of bad debts or they were bold enough to accept the bitter truth of hidden bad debts and decided to say spade a spade. It is only the question of identification. Some banks are yet to declare hidden bad debts as NPA.
Strongest banks are strong , not because their qquality of lending is better or their monitoring of advances is better than that of other banks. Or weak banks are not bad only because they are honest in identification of bad debts.
As a matter of fact politicians have exploited all PSU banks for political advantage and ruling parties of the past have always neglected in recovery of due from defaulters and failed to provide adequate , powerful , active and effective administrative and legal support to bankers in recovery of dues form defaulters.
Position of Bankers have become very much miserable during last few decades. They have to sanction loan under pressure and face torture in form of transfers and rejection in promotion if they not fall in line with whims and capricious attitude of their bosses.They are more loyal to their bosses than to their organisation. Furhter when we talk of recovery of dues from borrowers ,bank officials move in the marktr as beggar when they approach a defaulter for repayment of overdue amount in loan account. Bankers were and are still forced to enter into One Time Settlment or write off the dues because governments in general are invariably borrower frinedly. Present government is at least trying to recover money from willful defaulters like Mallya.
It is politicians in general and RBI officials who have polluted culture in banking and it is they who are solely responsible for present critical position of PSU banks. It is RBI officials, who failed to regulate banks as they are supposed to . It will not be an exaggeration to say that it is entire system which failed in keeping banks in good health. And the most painful part of this foul game is that government is still not taking any effective step to cure the sick culture of loan mela or waiver of loan culture.
Governmnt is trying to hide malady through merger and consolidation of banks. Sickness of banks will not be cured by merger of two or more sick banks, rather it will aggravate the situation and make the banks more sick and turn them dead. Instead of treating the sickness and removing the cuases of sickness , GOI is trying to pull all sick banks together . It is really ridiculous.
When position of these banks will further deteriorate , these officials will as usual curse foreign situations, foreign slowdown or global economic scene as they have been doing for decades. They never try to accept the level and real nature of sickness and hence they will never get success in curing sickness. When patients disclose fully the problems he or she is facing, there is no scope of any reduction in ailments.I am very much sure on this point.
Clever politicians and clever RBI officials are Doctor in delivery of good speeches and preaching sermons on how to improve health of banks , but they do not want to cure it for some reason or the other. Gradually , they will prove that public sector is not fit for any job and they will handover all sectors to private business houses and then exploitation of private business houses will increase and take us back to the period which existed before nationlisation of banks.
Position of Public sector undertakings is almost the same . It may be BSNL,or Indian airlines or Indian railways or other PSUs. It may be PSU banks or insurance companies. In the name of reformation , GOI has exploited and damaged government entities to serve their selfish purposes.
‘Overall economic slowdown’ to blame for bad loans: Rajan-The Hindu 3rd May 2016
The RBI Governor lists five other reasons for a spurt in stressed assets-The Hindu
Asked to explain the “real causes” of ballooning bad loans at public sector banks, the Reserve Bank of India (RBI) Governor Raghuram Rajan has put the blame on “overall economic downturn,” among other reasons, in his submission to a key Parliamentary panel.
Congress leader K. V. Thomas-led Public Accounts Committee (PAC), whose term ended on Saturday, has examined Mr. Rajan’s response but can ask the RBI Governor to appear before it in future once it is reconstituted, sources said.
Various public sector banks may also be asked to appear before the panel again to explain their position.
The Parliamentary panel had suo motu decided to examine the non-performing assets of the public sector banks, which touched Rs.3.61 lakh crore at the end of December 2015. The state-owned companies had first refused to appear before PAC, but agreed later and made their submission. During the examination of bad loan recovery process of the banks, the PAC found that in a number of cases the same bankers were trying to retrieve the bad loans who had earlier sanctioned the loans.
“Since the same officers, who sanctioned the loans are trying to retrieve it, it remains to be seen how successful they will be… It seems they did not have a mechanism,” a PAC member said on the condition of anonymity.
In its questionnaire for the RBI Governor, the panel observed that private sector banks and foreign banks do not have as much NPAs as the Public Sector Banks. This was despite the constraints under which the entire banking sector operates being the same, except for the Priority Sector Lending (PSL) requirements.
Noting that Private Sector Banks and Foreign Banks have 2.2 per cent non-performing assets whereas the Public Sector Banks have 5.98 per cent NPAs, the PAC felt “it is hard to believe that the difference is only due to the PSL”.
The PAC Chairman also sought to know the “real causes for the present spurt in NPAs and stressed assets” and whether these are really different from those listed by the Narsimham Committee that went into the NPA issue in 1998.
In his reply, Mr. Rajan said, “While some of the reasons for recent spurt in NPAs could be subset of those indicated by Narasimham Committee, the level of stressed assets are seen in the context of overall economic downturn”.
Mr. Rajan listed six primary reasons for a spurt in stressed assets that have been observed in recent times. These included domestic and global economic slowdown, delays in statutory and other approvals especially for projects under implementation and aggressive lending practices during upturn as evidenced from high corporate leverage.
Other reasons cited by Mr. Rajan were laxity in credit risk appraisal and loan monitoring in banks and lack of appraising skills for projects that need specialised skills resulting in acceptance of inflated cost and aggressive projections.
Besides, he also listed wilful default, loan frauds and corruption in some cases among the key reasons.
Recalling that the gross NPAs ratio had steadily declined from 15.7 per cent in 1996-97 to 2.36 per cent in 2010-11, Mr. Rajan said that the asset quality of the Indian banking system had again come under stress in the last couple of years, as a consequence of global and domestic economic slowdown.
“As on March 25, the gross NPA ratio was 4.62 per cent. As on June 2015, the gross NPA ratio was 4.97 per cent and the ratio of restructured standard assets to gross advance was 6.50 per cent,” he said in the reply.
Mr. Rajan also informed the panel about seven key methods evolved by way of recent regulatory measures by RBI to tackle the problem of NPA.
The Committee, however, felt that the six reasons cited by Mr. Rajan were not “mutually exclusive”.
“The parliamentary panel wanted to know how much of non-performing assets and stressed assets are attributable to genuine business/commercial risk and those which are not.
Mr. Rajan said that during the course of an internal study conducted to assess the causative factors of NPAs in April last year, primarily qualitative information on causes of non-performing assets in banks were sought from the responses received from banks, the main reasons with broad categorisation of ‘economy-wide factors, borrower-level reasons and bank level inadequacies’ came to the fore.
“However, based on responses, it was not possible to specifically derive how much of the NPA (quantum) were attributable to which specific reason ,” the RBI Governor said
BJP Leaders Mr. Subramanium Swami says , “In my opinion, RBI Governor is not appropriate for the country. I don’t want to speak much about him. He has hiked interest rates in the garb of controlling inflation that has damaged the country,”
He further says ,“The sooner he is sent back to Chicago, the better it would be.”
Action of Subramanium Swami criticising RBI Governor Mr. Raghuram Rajan is not at all good and need to be condemned by all. He should not use such derogatory word for a person who not only holds prestigious post of the country but also has earned name and fame in world economic forums. Rajan is undoubtedly a talented and intelligent economist and fittest person for the post of RBI Governor and he deserves to be awarded with second inning. If there is difference of opinion , ministers should sit with , discuss and resolve the issue in larger interst of the country . Politicians have to move above politics and take care of economics of the country .
Public Statement by politicians against top dignitories of the government or about any official cannot be considered good from any angle of consideration. I hope Prime Minister Mr. Narendra Modi will stop Swami like politicians in interfering in such sensitive matters. Rivalry among executive body , leaders of political parties and judiciary will prove deterimental to the country. Politicisation of executive post is not good for the health of the government and it undoubtdly adversely affects quality of governanceand it leads to culture of flattery and bribery only.
There is no doubt that only officers who are apt in flattery and bribery will tolerate such humiliating statements as made by Mr. Swami. An officer with dignity will not like to remain in post such as RBI Governor if bad words are used against him. Country will suffer if politiicans make mockery of officers and their image for political gain.
Country will grow only when officers are honest and devoted to their duty and when such officers get due respect and recognition..
I have no hesitation in saying that UPA government lost trust of people of India only because it promoted culture of flattery and bribery in politics, in administration and in judiciary too . Officers who were ready to become yesman of leaders of Congress Party got awarded during UPA regime at the cost of officers who used to serve devotedly and who were loyal to their post .Country had to suffer huge losses in various scam only due to bad culture promoted by Congress Party during their six decade rule.
I hope Mr. Modi will take proper care and will not allow their Ministers and party men to make unwarranted statement against any official which demoralises entire service class people. Let executive and judiciary work independently and without fear of repercussion from the side of ruling party until they breach violate laws and breach limits of tolerance in a civic society. Politicians must be subjected to certain norms of discipline as officials are supposed to follow.
Rajan unfit to be RBI Governor: Swamy-The Hindu-12 th May 2016
BJP leader Subramanian Swamy on Thursday suggested that Reserve Bank Governor Raghuram Rajan be removed from the post as he was responsible for “unemployment and collapse” of industrial activity.
BJP Leaders Mr. Subramanium Swami says , “In my opinion, RBI Governor is not appropriate for the country. I don’t want to speak much about him. He has hiked interest rates in the garb of controlling inflation that has damaged the country,”
He further says ,“The sooner he is sent back to Chicago, the better it would be.”
Mr. Rajan is the on-leave Professor of Finance at the University of Chicago’s Booth School of Business.
Action of Subramanium Swami criticising RBI Governor Mr. Raghuram Rajan is not at all good and need to be condemned by all. He should not use such derogatory word for a person who not only holds prestigious post of the country but also has earned name and fame in world economic forums. Rajan is undoubtedly a talented and intelligent economist and fittest person for the post of RBI Governor and he deserves to be awarded with second inning. If there is difference of opinion , ministers should sit with , discuss and resolve the issue in larger interst of the country . Politicians have to move above politics and take care of economics of the country .
Public Statement by politicians against top dignitories of the government or about any official cannot be considered good from any angle of consideration. I hope Prime Minister Mr. Narendra Modi will stop Swami like politicians in interfering in such sensitive matters. Rivalry among executive body , leaders of political parties and judiciary will prove deterimental to the country. Politicisation of executive post is not good for the health of the government and it undoubtdly adversely affects quality of governanceand it leads to culture of flattery and bribery only.
There is no doubt that only officers who are apt in flattery and bribery will tolerate such humiliating statements as made by Mr. Swami. An officer with dignity will not like to remain in post such as RBI Governor if bad words are used against him. Country will suffer if politiicans make mockery of officers and their image for political gain.
Country will grow only when officers are honest and devoted to their duty and when such officers get due respect and recognition..
I have no hesitation in saying that UPA government lost trust of people of India only because it promoted culture of flattery and bribery in politics, in administration and in judiciary too . Officers who were ready to become yesman of leaders of Congress Party got awarded during UPA regime at the cost of officers who used to serve devotedly and who were loyal to their post .Country had to suffer huge losses in various scam only due to bad culture promoted by Congress Party during their six decade rule.
I hope Mr. Modi will take proper care and will not allow their Ministers and party men to make unwarranted statement against any official which demoralises entire service class people. Let executive and judiciary work independently and without fear of repercussion from the side of ruling party until they breach violate laws and breach limits of tolerance in a civic society. Politicians must be subjected to certain norms of discipline as officials are supposed to follow.
Rajan unfit to be RBI Governor: Swamy-The Hindu-12 th May 2016
BJP leader Subramanian Swamy on Thursday suggested that Reserve Bank Governor Raghuram Rajan be removed from the post as he was responsible for “unemployment and collapse” of industrial activity.
“In my opinion, RBI Governor is not appropriate for the country. I don’t want to speak much about him. He has hiked interest rates in the garb of controlling inflation that has damaged the country,” he told reporters in Parliament House.
The Governor’s actions have “led to collapse of industry and rise of unemployment in the economy”, he said. “The sooner he is sent back to Chicago, the better it would be.”
Mr. Rajan is the on-leave Professor of Finance at the University of Chicago’s Booth School of Business.
After assuming charge as RBI governor in September 2013, Mr. Rajan gradually raised the short-term lending rate from 7.25 per cent to 8 per cent and had retained the high rates throughout 2014.
He kept the rates high, citing inflationary concerns despite intense pressure from the Finance Ministry and the industry for softening them with a view to boosting growth.
The Governor began the process of lowering the rates in January 2015 and since then it has come down by 1.50 per cent to 6.50 per cent
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