Imagine a case that government of India or state government fixes a ceiling to in-charge of police station that more than 100 FIR is registered in a month . To make it crystal clear , Government is fixing maximum limit for crime to be registered in books of police , irrespective of worst law and order problem in the area. This is like government is fixing a target for judges in courts that not more than 25% of criminals should be punished in period .This is just like giving instruction to principal of a education institute that none of students be declared fail in school level examination. Mr. Kapil Sibbal had given such instruction when he was Minister. Is it not ridiculous? But it is happening in India in disguise.
Similarly bankers fixes a target for terminal NPA. It means , a bank cannot declare all bad debts as bad debts until they are permitted to do so by higher bosses. It is just like a case when bank fixes a ceiling that not more than 5 out of 100 corrupt officials will be punished in a year or an officer will be punished only once in a year even if he or she commit mistake every year. Bank fixes target for recovery from bad borrowers for each branch due to which branch officials resort to fraudulent methods to book artificial recovery and also get promotion b such evil works.
Similarly RBI is silent on audit reports submitted by its own inspectors and auditors and they are negotiating or bargaining with bank officials as to what time is needed to declare all bad debts as bad debts. Bank officials hide Bad debts to save corrupt officials and cheater business men who are not repaying loan wilfully. Top Officials retire safely , RBI auditors retire, one after other inspection is carried out, government changes and finance minister changes, but no real step is taken to punish real culprit, either bankers or borrowers who have cheated bank.
It is really shameful that even RBI remains silent and has ben silent for decades on unethical methods used by bank officials to hide bad debts and to hide bad advances sanctioned by corrupt officials .This is perhaps POSITIVE ATTITUDE of bankers as also that of RBI officials.
There is a proverb in villages " saiyan bhai kotwal to dar kahe ka" It means when police is husband , there is no need to fear for spouse before committing any crime.
Nothing is transparent and crystal clear in government offices though all talks of it 365 days and though every government official preach lengthy sermons on it . Various circulars and guidelines have ben issued by RBI and all banks for all branches in this regard to ensure strict adherence of laws and rules and even certificate of compliance is also obtained from each head. But the ground reality is entirely a different story.
Bad loans continue to weigh; UCO Bank registers highest growth in gross NPAs: RBI-DNA
UCO Bank was the worst performer among the public sector banks registering highest increase in gross non-performing assets (NPAs) in percentage terms against total loans in the last fiscal.
According to the provisional RBI data taking into account domestic operations of banks, gross NPA to gross advances ratio of Kolkata-based UCO Bank increased to 8.05% at the end of March 2015 from 4.47%, an accretion of 3.58% on an annual basis.
It was followed by Indian Overseas Bank (IOB) and Bank of Maharashtra (BoM) with gross NPA rising to 8.30%, and 6.18% respectively at the end of March 2015. In the case of IOB variation compared to the previous financial year was 3.46% while for BoM was 3.02%.
Besides, the gross NPA taking into account the domestic operation of Dena Bank increased from 3.33% to 5.29% at the end of 2014-15, recording a variation of 1.96 %.
At the same time, Corporation Bank's gross NPA level rose from 3.42% to 4.80% at the end of March 2015, showing an accretion of 1.38 over the previous fiscal.
Rising NPA has hit the bottomline of banks and to strengthen their balance sheet the government is providing Rs 25,000 capital support in the current fiscal.
Banks want bad loan mismatch disclosure postponed till 2018-Business Standard
The move is aimed at bringing greater transparency in reporting the financial numbers
After the Reserve Bank of India (RBI) asked commercial banks to disclose any mismatch on bad loans and provisioning in their financial statements, bankers have requested that this be postponed till January 2018.
In its policy review this week, the regulator has observed that there are divergences between what banks report on bad loans and provisioning as compared to what RBI supervisors report, and that mismatch needs to be disclosed in the financial statements. While RBI has not gave any timeframe on when this will be implemented, it has said instructions will shortly be issued.
It is often the case that the numbers a bank reports on non-performing asset provisioning for a particular quarter is often disputed by RBI supervisors during annual financial inspection. If a bank is not able to convince the supervisors about the accuracy of the numbers it has reported, it has to revise the figures as advised by the supervisors.
As a part of its supervisory process, RBI assesses compliance by banks with extant prudential norms on income recognition, asset classification and provisioning (IRACP). "There have been divergences between banks and the supervisor as regards asset classification and provisioning,” RBI had said in the review on Tuesday.
Adding: “To bring in greater transparency, better discipline with respect to compliance with IRACP norms, as well as to involve other stakeholders, RBI will mandate disclosures in the notes to accounts to the financial statements of banks where such divergences exceed a specified threshold.”
Chief executives of banks who met the RBI governor after the policy announcement on Tuesday had requested this mandate be postponed till January 1, 2018, which is when the new International Financial Reporting Standard (IFRS) comes into force.
“The disclosure (divergence between bank and supervisory reports) is a part of the IFRS mandate. We need time to prepare for the new regime. So, we have requested the regulator for more time to comply with the new norms,” said a banker who attended the meeting with the regulator.
The move is aimed at bringing in greater transparency in reporting the financial numbers. The lack of this has often resulted in lack of investor interest, particularly in the case of public sector banks. Most banks’ stocks are trading at a discount to their book value.
http://www.business-standard.com/article/finance/banks-want-bad-loan-mismatch-disclosure-postponed-till-2018-115100100231_1.html
SBI, ICICI, Axis Bank lead push for strategic debt restructuring
To help banks with the process of reducing their stressed assets, RBI introduced the SDR rules in June
No comments:
Post a Comment