Now it has become crystal clear to all that management of every public sector bank are to suffer more pain and face erosion in profit and even incur loss if RBI Governor Mr Rajan remain rigid on his stand that all banks should clean their balance sheets latest by March 2017 and should increase provisions on stressed assets identified by RBI latest by March 2016. This has become more evident when SBI Chairman expressed apprehension of sharp rise in NPA and fall in profit.
Now there is no doubt that Chiefs of all banks including so called strong bank like SBI had resorted to hiding of bad debts using illegal and unethical ways and tools in all preceding financial years to inflate profit ,to earn unjustified incentive and to get quicker promotion.
They all are guilty of window dressing. In the past they all were caught committing fraud in making inadequate or no provisions for staff terminal benefits payable to them on retirement.
Inspite of all warnings issued by RBI and Ministry of finance not o inflate business and profit of bank by window dressing, Chiefs of every bank ignored and disobeyed such warning ,and they have been doing so year after year. Who will punish such high profile fraud masters?
As a matter of fact ,branch heads of almost all branches of all banks are resorting to window dressing and to conceal stressed assets by using wrong and improper ways. This culture of playing foul game is very old and promoted and irrigated by all top officials . Junior officers have to dance as per direction given to them by their seniors. RBI and GOI have been silent spectator of all such game of manipulation for decades.
I may say that without manipulation , PSB cannot earn profit because the culture of lending is erroneous, culture of promotion in PSB is flattery and bribery based and because politicians use PSB to enhance their vote bank. Unless and until there is change in DNA of bankers and politicians, there is no guarantee that creation of bad assets will stop rising. Bankers will continue to blame economic slowdown or global recession and continue to cause loss to their bank in greed of getting self interest served and on the contrary private banks will continue to boost up their profit and business quarter after quarter.
Shares of banks with exposure to large corporates have come under selling pressure in recent weeks with those in the public sector bearing the brunt. The stock market value of one private bank HDFC Bank is now almost the same as that of State Bank of India and all the 20 nationalized banks put together. These 21 banks control over 70% of bank lending in the country whereas HDFC Bank, the country's second largest private lender, accounts for 6%. This proves that investors do not have trust on functioning and financial figures of public sector banks and they do not have trust on quality of assets of PSU banks and SBI . They know it very well that these banks are hiding bad assets in their books to reduce burden of provisioning and to inflate profit.
It is however a matter of pleasure that RBI Governor Mr. R Rajan has taken some step to clean balance sheet of public banks and State bank of India . It is true that if all banks honestly declare all bad asses as bad, there will be voluminous jump in value of bad assets . As on September 2015, Gross NPA of banks have crossed 6% of total assets and that of stressed assets have crossed 14% . But if all hidden stressed assets are exposed honestly, Gross NPA will rise to more than 25 % .
It is another matter of pleasure that RBI official and the government has assured it will provide public sector banks all the capital they need to grow their business and the central bank will release regulatory capital if required.
Let us see how far bankers act honestly and how far RBI officials and government officials are able to punish bank officials who still indulge in window dressing to hide NPA and those who perpetuate culture of treating bad assets as standard assets.
17th January 2016
Following is the copy of letter AIBOC has written to Ministry of Finance either to protect bank or to protect guilty officers or to save their own image when RBI is going to expose the evil culture prevalent in public bank for which both management and trade union leaders are responsible.
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