Success of Xth Bipartite Depends On Recovery Of Dues from Top 30 Bank Defaulters

In recent past only  Finance Minister Mr. Chidambram instructed Managing Director and Executive Directors of all public sector banks to focus on recovery in top thirty bad loan accounts and take all possible legal steps to prevail upon bad borrowers to repay the dues. Unfortunately the result precipitated out of warning given to bank chief by learned Finance Minister Mr. Chidambram is not encouraging. Reason may be due to legal constraints in some cases but in majority of the cases they are delaying or avoiding action against such bad borrowers only because of the fear of exposure of all ill motivated bank officials and ministers who were indulged in wrongful lending to these defaulting borrowers. 

Senior officers of banks and ministers  are hesitating taking action or willfully delaying action against high value  borrowers in fear of exposure of their misdeeds, their acceptance of illegal money and their wrong decisions.

Accountability is never fixed against top bank officials, RBI officials and ministers who form part of Management Committee which takes decision of sanction in high value loans. But exercise of staff accountability in bad loan accounts and taking of action against erring officials is never delayed in case of small value loans. 

Action can be taken against low rank officials due to whose fault loan valued a few thousand or a few lac rupees goes bad but action can never be taken against CMD and ED of any bank who are really instrumental in wrong lending and consequent rise in bad debts. It is to be noted here that upto the year 2000, 70 percent of total bad debts of any bank belonged to small loan accounts but now it is just reverse. It means 70 to 80 percent of total bad debts are due to defaults made by  rich business houses and are in high value loan accounts only.

Slippages in all banks have been increasing quarter after quarter and mainly in high value accounts. Great Deputy Governor Mr. K C Chakravorty has also said so many times that major part of stressed assets in due to default made by big borrowers. Rich are growing richer but their loan is going bad.

Inspite of such bitter truth accepted by learned FM and learned Dy Governor RBI and pointed out by several op retired bankers, they have not taken action against any of ED or any of CMD of any of top officials of any of banks for their wrong lending, for lapses in monitoring and for their willful delay in timely action against defaulting borrower. Because most of EDs and CMDs and senior officers of public sector banks are promoting corruption, bribery and flattery only in nexus with ministers, powerful politicians and powerful officials of RBI, regulating and inspecting offices like RBI, CAs , CVC or CBI.

However it may be safely said here that if banks and Government of India together get success in recovery of  entire money blocked in top 30 bad accounts of each public sector bank and State Bank of India I have no doubt that health of all state run banks will once again start improving, profitability will start growing many times and banks will not hesitate in sanctioning a wage hike of even 50 percent to bank staff who are eagerly awaiting respectable wage hike in long overdue Xth Bipartite Settlement.

And if corrupt bankers are removed and punished , there is no doubt that there will be dramatic turnaround in health of all banks.

And if politicians stop vote bank politics with bank , there is no doubt that Banks will help a lot in improving  the economy of the country as a whole.

GDP growth of the country  and balanced distribution of growth so achieved depends to a great extend on health of banks and not on FDI or FII government is able to garner or nuclear deal UPA government signed..

Private Banks are growing quarter after quarter but Chiefs of public sector banks are accusing global and economic recession for their failure and Manmohan Singh and UPA led Central government endorses such bad logics only to serve their  political agenda and to enrich their vote bank. Congress Party earns vote of poor by waiver of their loans and  gets huge Election Fund by giving freedom to bank chiefs  in sanction of high value loans and lending to big houses .

Fraud on banks, more by the rich, says RBI’s K. C. Chakrabarty--Business Line 27th July 2013

"When the times are good, the rich steal. When the times are bad, the poor people also steal. But this means rich people are stealing more," said K. C. Chakrabarty, RBI Deputy Governor.

NEW DELHI, JULY 26:  

“When the times are good, the rich steal. When the times are bad, the poor people also steal. But this means rich people are stealing more,” said K. C. Chakrabarty, RBI Deputy Governor.

An analysis of the frauds reported in the banking system over the last two decade shows that the number of frauds had not gone up significantly, but the quantum has increased manifold.

Loan-related frauds are a major concern for the central bank, Chakrabarty said.

The number of reported frauds in the banking system over the last 10 years was 1,76,547, and valued at Rs 31,400 crore, he added. In the last 25 years, a mere 61 fraud cases (involving Rs 50 crore or more in each case) accounted for a whopping Rs 13,000 crore, through 208 bank accounts.

It is not transaction-related frauds (like credit/debit card, and so on) that are a worry, but loans-related ones, rued Chakrabarty at an Assocham conference on ‘Financial Frauds’ in the Capital on Friday.

“Majority of the frauds are wrong sanctions at the highest level of the banks. The problem is we are not able to take definite action in definite timeframe.”

The Deputy Governor expressed disappointment that banks were indifferent to monitoring large frauds and whatever fraud reporting was happening, was in silos.

Some of the reporting of frauds in large transactions happened only after they had been recognised as non-performing assets, he said.

Chakrabarty also stressed the need for a proper definition of ‘fraud’ in the banking system. At the same time, he said banks should not get confused between “loss” and “fraud”.

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