Malady is deep rooted and no power on earth can clean it overnight or in a year or two. I therefore always say that corruption flow from top and it is ministers of previous rule who promoted reckless lending , sometimes in the name of poor and sometimes in the name of development of infrastructure or power . I feel pleasure to observe that present RBI Governor Mr. Raghuram Rajan has taken few initiatives to improve the health of PSBs.
Mr. Chidambram left no stone unturned to use banks for enhancing vote bank of congress party. Now bankers are also cultured to lend without verifying quality of borrower and quality of project. During course of time and under the leadership of Congress Party bankers also learnt to sanction loan blindly to achieve target and to get quicker promotion.
Bitter truth even now is that bankers are not ready to say 'NO' to anyone who come for seeking loan from bank. Rather bankers are snatching business of other banks . PSBs are competing with each other and causing loss to public money. Unscrupulous persons get success in getting loans from many banks by offering gifts to top officials in cash and kind. Culture of bribery and flattery in PSB has taken deep roots and to add fuel to fire , even trade Union leaders who are supposed to be protectors of banks also started acting in tune with corrupt bankers .
It has become a culture in PSBs to lend quickly , declare the loan as NPA and then write it off or sacrifice huge amount in compromise settlement. Court cases have become ineffective in recovering loans from defaulters. Cases filed in various courts have been pending for decades undecided . Administrative offices and police do not take care to recover loan from defaulters. And so on..
Even now bankers are not ready to punish corrupt borrowers, corrupt bankers and corrupt politicians. Unless we learn and unless Government learn to punish erring officials in bank, erring officials in administrative and legal machinery and unless the get success in stopping politicians misusing banks for vote , we cannot dream of an improvement. neither in health of bank or in wage structure of bank staff. It will take a long time to change the culture .It is easy to preach sermons to banks for Mr. Modi but it is very difficult to change the deep rooted dirty culture of bankers and politicians he is associated with.
Modi and Jaitley have to first understand that PSBs are not profit making entity and hence there should not be imposed target or pressure for credit growth or profit growth at par with that in private banks. PSBs cannot be used for social welfare schemes and at the same time expect to earn greater profit too. Private banks in same economic condition earn huge profit and achieve large credit growth whereas PSBs fail in all respect , rather they are facing erosion in capital, erosion in profitability and erosion in credit quality and monitoring of assets. It will take long time when government will understand that managing banks is not as easy as they think for it.
RBI has almost discontinued taking stock of what bankers are doing , they have completely stopped the work of inspection and they have no courage to tell anything to ruling politicians even if they give wrong dictation to bankers. Before 1991, RBI used to inspect various branches of all banks to find out quality of lending and quality of control and accounting in banks. But slowly they left this work. RBI during last three decades trusted certificates , right or wrong submitted by bank officials on various subjects. In the name of liberalisation , government to some extent ended license raj but introduced certificate raj.
Fact is that even Chartered Accountant who are supposed to certify correctness of accounting and write about actual health of bank's assets have become a commodity which top officials buy easily by paying handsome amount to them and by extending red carpet welcome to them . Even vigilance officials and auditors , internal or external , rating agencies , all are submitting reports and issuing certificate of health on the basis of illegal money they get in return.
It is therefore true to say that it is not easy for RBI and GOI to transform and reform public sector banks. Let us however have positivity in our mind at least from current government.
Defaulters must not flaunt money: Raghuram Rajan-Times of India- 23.01.2016
Lashing out against promoters of defaulting companies who continue with lavish lifestyles despite owing thousands of crores to banks, Reserve Bank of India governor Raghuram Rajan has said that these businessmen are sending a wrong message and pushing up the cost of borrowing for others.
"If you flaunt your birthday bashes even while owing the system a lot of money, it does seem to suggest to the public that you don't care. I think that is the wrong message to send. If you are in trouble, you should be cutting down your expenses," said Rajan in what appeared to be a veiled reference to Vijay Mallya, promoter of Kingfisher Airlines. Mallya had recently celebrated his 60th birthday in style in Goa despite his Kingfisher Airlines owing banks over Rs 7,500 crore.
In an interview to NDTV, the governor said that the clamour for lower interest rates should include efforts to get the banking house in order in respect of default recoveries. "The system has been geared to favouring those who have the ability to work the courts. The policy that you (large businessmen) follow is that during good times you take the upside but in bad times you go to banks and ask how much of a haircut are you going to take?" He said that while the bankruptcy law would be a powerful tool, it had some way to go. In his interview, Rajan said that this was not about being against big businesses or successful businessmen and neither was it a Robin Hood issue. "This is an issue about the wrongdoers among the community who raised the cost of borrowing for everybody."
"If you flaunt your birthday bashes even while owing the system a lot of money, it does seem to suggest to the public that you don't care. I think that is the wrong message to send. If you are in trouble, you should be cutting down your expenses," said Rajan in what appeared to be a veiled reference to Vijay Mallya, promoter of Kingfisher Airlines. Mallya had recently celebrated his 60th birthday in style in Goa despite his Kingfisher Airlines owing banks over Rs 7,500 crore.
In an interview to NDTV, the governor said that the clamour for lower interest rates should include efforts to get the banking house in order in respect of default recoveries. "The system has been geared to favouring those who have the ability to work the courts. The policy that you (large businessmen) follow is that during good times you take the upside but in bad times you go to banks and ask how much of a haircut are you going to take?" He said that while the bankruptcy law would be a powerful tool, it had some way to go. In his interview, Rajan said that this was not about being against big businesses or successful businessmen and neither was it a Robin Hood issue. "This is an issue about the wrongdoers among the community who raised the cost of borrowing for everybody."
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Charity b stopped.
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