Asst quality audit done by RBI in last year only for top 150 accounts has exposed hollowness of almost all public sector banks. Most of them are either in huge loss or have faced huge erosion in profits during the financial year 2015-16. Big jump in Gross Non Peforming Assets have been reported by almost all PSU banks. Halth of private banks is also not as good as reported in public domain.
If all loan accounts are audited by RBI ,one may very well imagine the fate of these banks, one may also understand the gravity of sickness in banks and at least realise now how much Congress party had already damaged during decades of their misrule.
If all loan accounts are audited by RBI ,one may very well imagine the fate of these banks, one may also understand the gravity of sickness in banks and at least realise now how much Congress party had already damaged during decades of their misrule.
Biggst bank ,SBI will declare result on 27th of this month. You may imagine how much painful the result of SBI in fourth quarter will be if they too follow in true spirit the advice given by RBI Governor Mr. Raghuram Rajan regarding asset quality of top 150 accounts audited by them.. I have no doubt that SBI will leave other banks far behind in matter of loss and Gross NPA and break all records of the past.
SBI has delayed maximum in publishing results only because they are perhaps busy in manipulating figures so that damage is reduced to best possible extent. But in the long run, they will also have to come out with correct figures on losses, provisons and NPAs.
Some other banks have also cleverly and fraudulently managed to save their image by making lesser provisions for bad assets and booked little profit fraudulently just to save their falsely brightened career from damage.
Finance Minister Mr. Arun Jaitley and RBI Governor Mr. Rajan are still in dark about real volume of stressed assets . They are unable to visualise the volume of pain hidden in bank's books of accounts. NPA may grow from 5 to 50 percentage if all banks shows true honesty in saying spade a spade, in rcognisiing and identifying bad assets strictly as per RBI prudential norms.. Still they have huge volume of bad and stressed assets hidden in disguise as standard assets so that lesser provision is necessitated..
Clever bankers have been manipulating figures for years and decades. Window dressing is persisting for decades despite all preachings by RBI and MOF . Every quarter they claim that health of their bank will improve from next quarter. But each quarter , health deteriorates only. This has been happening for last five to ten years. FM and RBI will take long time to understand the gound reality.
Let us see when real truth emerges out and when real reasons are identified by Ministry of Finance and by RBI officials and when effective steps are taken to improve quality of banking. Let us see when banks start focusing on their assets including human assets and stop focusing on their bosses and non- banking activities.
Clever and corrupt bankers as well as politicians usually blame economic slowdown or interest rate or nature but never punish real guilty. They say on the one hand that GDP growth of the country is highest in the world. But when they talk of health of banks, they say that bad assets are creation of ecoomic slowdown and global recession. Is it not inconsistent with ground rality.
Until real guilty people are punished and until there is change in culture of bankers and politicians, we should not dream of reformation or real cleaning in banks. We need not focus as much on cleaning of balance sheet as it is needed to focus on cleaning of minds and hearts of bankers, borrowers and politicians.
FM Mr. Arun Jaitley has said yesterday, that media men , opposition parties , Parliamentarians and court should not intervene in banking activities related to lending as well as compromise with recalcitrant and defaulting borrowers.
I would like to mention here that neither media men nor court interferered anytime during last years and decades in the matters related to lending decisions and in decisions related to writing off of bad loans or in arriving at settlment with bad borrowers. Bankers and political leaders are to be held responsible for all lapses and evil works which has resulted in erosion of health of PSU Banks.
Banks have rather enjoyed absolute freedom in sanction of loans and in wirting ff of bad loans. Politicians exrt pressure from top , but they do not burn their fingers by giving written instructions to do this or do that. Political masters advice Chiefs of banks on phone what a bank has to do and what not to do. Similarly bosses of banks give verbal instructions to their subordinates.
I would like to mention here that neither media men nor court interferered anytime during last years and decades in the matters related to lending decisions and in decisions related to writing off of bad loans or in arriving at settlment with bad borrowers. Bankers and political leaders are to be held responsible for all lapses and evil works which has resulted in erosion of health of PSU Banks.
Banks have rather enjoyed absolute freedom in sanction of loans and in wirting ff of bad loans. Politicians exrt pressure from top , but they do not burn their fingers by giving written instructions to do this or do that. Political masters advice Chiefs of banks on phone what a bank has to do and what not to do. Similarly bosses of banks give verbal instructions to their subordinates.
Rather this unregulated freedom given to bankers in the name of reformation and autonomy to bank management in the year 1991 has only resulted in accumulation of so much pain and so much rise in sickness in these banks. Techonologial advancement and introduction of Core Banking Solutin has made it difficult for bankers to conceal their sin for long.
FM cannot understand the real picutre of hidden malady and bad culture of bankers and politicians until he continue to collect the views from same gang of Chiefs of Banks who have contirbuted in increasing pain in these banks. Thieves cannot suggest right and correct ways to police to catch culprits. During last thre decades , every FM has accepted the hidden malady and irregularities in banks but they cleverly ignored the prescribed medicine to cure the sickness. Various committes suggested various ways and means to clean banks , but unfortunatley none of them put into action.
Vinod Rai , head of Bank Board Bureau (BBB) also in last few days has said repeatedly that bank officers should not be questioned how they take lending decisions and how they write off bad loans and how they sacrifice huge amount of money in arriving at settlement with defaulting borrowers . Vinod Rai also perhaps assumes that all bankers are discharging their duties with honesty and sincereity.
Vinod Rai also knows that politiicans of this country are beyond control . He knows that vote bank politics of ruling or opposing parties cannot be stopped. That is why he advices total blindness towards ongoing corrupt culture. Actually our country has witnessed various scams causing loss to the tune of thousand and lacs of crores of rupees to country and hence loss arising due to bad debts amounting to 10 or 20 lac crore by PSU banks appears very small amunt to Mr. Vinod Rai and to government necessitating action against erring officials and politicians.
Vinod Rai also knows that politiicans of this country are beyond control . He knows that vote bank politics of ruling or opposing parties cannot be stopped. That is why he advices total blindness towards ongoing corrupt culture. Actually our country has witnessed various scams causing loss to the tune of thousand and lacs of crores of rupees to country and hence loss arising due to bad debts amounting to 10 or 20 lac crore by PSU banks appears very small amunt to Mr. Vinod Rai and to government necessitating action against erring officials and politicians.
I hope concepetion and perception of learnd, honest, sincere and intelligent person like Mr. Vinod Rai will drasticaly change if he also peeps into accounts of any bank. Only forensic audit of each high value loan account , at least loans and advance with outstanding value more than Rs. one croe, can reveal how much problem is man made and how much is due to unavoidable natural reasons.
If we look into reasons of smaller loans too, the situation will prove to be explosive and suicidal too. Because banks cannot avoid small loans which are equally unsafe and irrecoverable. They know that in the name of social welfare , banks have to lend farmers and small traders and industrialists to inflate figure of priority sector lending .Banks have to take part in charity banking as taught by political masters. Waiver of loan has been resorted to by bankers only at the instance of political masters from time to time and this has adversely affected the repayment culture in the country. Loan Mela culture has also contributed in worsening lending quality and in rise in corruption in banks. Let us therefore concentrate on only high value loans.
Culture of loan melas, culture of write off of loan and culture of protecting bad officials and politiicans has damaged health of banks. To add fuel to fire, regulators also resort to evil ways to cure ailing banks.
FM suggests merger and consolidation of banks. In my view , merger is not at all a solution to problem of bad assets. Merger will simply change the shape of banks and bring its name in list of top banks of the world. But it cannot change the quality of lending and quality of human resources running these banks. It cannot stop politicians exploiting banks for vote bank and it cannot stop them for serving interest of their kith and kin, friends and relatives.
FM talks of consolidation of PSU banks on the one hand and on the other they are giving license to Payment banks, differentiated banks, Post bank and other small banks or big bank . This inconsistency in their policy has created more confusion than eliminating it or reducing it . They are dreaming of big bank by merging smaller banks so that the new enitty may be reckoned in top 100 banks of the world . But the fact is that when management of banks is unable to manage small banks , how will they manage big banks is a million dollar question.
Some of VIPs in government plead for higher packages for executives to make them more loyal . But they do not like to say why government school teachers do not teach though their pay package is greater than that of their counterpart in private schools. Teaching in private schools is far better than that in public schools though government spend huge amount of money on education every year.
FM suggests merger and consolidation of banks. In my view , merger is not at all a solution to problem of bad assets. Merger will simply change the shape of banks and bring its name in list of top banks of the world. But it cannot change the quality of lending and quality of human resources running these banks. It cannot stop politicians exploiting banks for vote bank and it cannot stop them for serving interest of their kith and kin, friends and relatives.
FM talks of consolidation of PSU banks on the one hand and on the other they are giving license to Payment banks, differentiated banks, Post bank and other small banks or big bank . This inconsistency in their policy has created more confusion than eliminating it or reducing it . They are dreaming of big bank by merging smaller banks so that the new enitty may be reckoned in top 100 banks of the world . But the fact is that when management of banks is unable to manage small banks , how will they manage big banks is a million dollar question.
Some of VIPs in government plead for higher packages for executives to make them more loyal . But they do not like to say why government school teachers do not teach though their pay package is greater than that of their counterpart in private schools. Teaching in private schools is far better than that in public schools though government spend huge amount of money on education every year.
FM focus on quality of ED and CMD, but real improvement will occur only when due recognition and value is given to real performers in promotions and transfers. Quality of officers heading branches and administrative offices of banks is too poor to protect banks from disaster.
RBI Governor Mr. Rajan says that one third of ATMs are non-functinal or not managed properly to service requirements of ATM cardeholders. He should try to understand why has it so happened. Mindless and reckless expansion of ATMs and Branches has resulted in pathetic postion of not only ATMs but also branches of various banks.
Banks in public sector has opened branches without applying their brain and without having vision about future of these branches.They open ATM after ATM and branches after branches only to keep ruling party happier and in good stream so that their personal career gets brightened.
Politicians are also responsible for reckless expansion of branches. It is they who for the sake of vote banks built pressure on management of these banks to open branches in each village and then open one ATM associated with each branch. They do not understand or they are least bothered whether these ATMs and Branches will be economically viable or not .
I have no hesitation in saying that not only one third of ATMs , but more than half of branches of PSU banks are critcially ill and non-productive. There are many branches in the country which do not receive transactions from even 50 customers a day, but they have opened one ATM to such branches. Naturally per day hit at these ATMs can never be profitable. Similarly , bank officers do not have time or do not have quality manpower to adequately service these ATMs in time.
Prime root cause behind deteriorating position of health of banks is also its Human Resource Policy and its real execution in practice. Recruitment and Promotion taken place during last three decades has simply promoted a culture of bribery and flattery only. Officers and employees in general who are real performers are neglected and rejected in all processes of transfers and promotions which are said to be merit oritented. This is why majority of senior and experienced staff are not taking part in promotion processes taking place in banks every year.
Bank management use to say that they have scarcity of good workers, it is totally worng and false. Still there are huge number of good officers who do not want to be elevated because they cannot manage flattery and costly gifts for their bosses. They do not want their families to be disturbed due to whimsical decisions of corrupt officers and baseless ruling in their banks. Every employee who joins a banks had high ambition to rise . But the culture of their bosses shatters their dream and they think it safe to avoid taking promotions . Who will change this culture? It will not stop until there is change in mindset of bosses.
Jaitley says that media , Parliamentarians and court should not question decisions of bankers in lending and compromise settlements or in write off.
I fully disagree with his views .
Rather I like to ask Mr.Jaitley whom should we ask questions on why assets with more than 20 lac crores are stressed, why lacs of crores of good money is sacrificed to please defaulters.
Media and courts were in deep slumber till case of Mallya came in public domain and it is only due to their intervention after exposure of Kingfisher default, rightly or wrongly, that government is now appearing as serious to contain sickness of banks and appear to be interested to recover money from at least wilful defaulters declared by banks themselves.
http://importantbankingnews2.blogspot.in/2016/05/do-not-question-bank-officers.html?m=1
Bank chiefs will not be questioned over NPA resolution decisions: Rai---Hindu Business Line
http://www.thehindubusinessline.com/money-and-banking/bank-chiefs-will-not-be-questioned-over-npa-resolution-decisions-rai/article8626679.ece
I fully disagree with his views .
Rather I like to ask Mr.Jaitley whom should we ask questions on why assets with more than 20 lac crores are stressed, why lacs of crores of good money is sacrificed to please defaulters.
Media and courts were in deep slumber till case of Mallya came in public domain and it is only due to their intervention after exposure of Kingfisher default, rightly or wrongly, that government is now appearing as serious to contain sickness of banks and appear to be interested to recover money from at least wilful defaulters declared by banks themselves.
http://importantbankingnews2.blogspot.in/2016/05/do-not-question-bank-officers.html?m=1
Bank chiefs will not be questioned over NPA resolution decisions: Rai---Hindu Business Line
http://www.thehindubusinessline.com/money-and-banking/bank-chiefs-will-not-be-questioned-over-npa-resolution-decisions-rai/article8626679.ece
One in every 3 PSU banks has stressed assets higher than net worth-LiveMint 25.05.2016
In the last six months, 22 state-owned banks reported losses of Rs30,700 crore
Things have gone from bad to worse in India’s banking industry since the central bank cracked the whip on cleaning up their balance sheets. In the last six months, 22 state-owned banks reported losses of Rs.30,700 crore. They also wiped off 16.4% of their net worth.This reduction in net worth affects the already precarious capital position of these banks.
Need to empower banks to deal with non-performing assets: FM Arun Jaitley -
Economic Times 25th May 2016
The reaction of the media, parliamentarians and courts ended up weakening banks, the finance minister said. "Some of us in our bonafide enthusiasm are doing exactly the opposite. The media will make a business loss look like a scam when it is not. MPs will demand 'recall all loans' not realising that economic activity will come to a standstill. And the courts will take over the management of NPAs. Now, as a result of these three factors, we bring unfair pressure on executives of banks who coul ..
Economic Times 25th May 2016
The reaction of the media, parliamentarians and courts ended up weakening banks, the finance minister said. "Some of us in our bonafide enthusiasm are doing exactly the opposite. The media will make a business loss look like a scam when it is not. MPs will demand 'recall all loans' not realising that economic activity will come to a standstill. And the courts will take over the management of NPAs. Now, as a result of these three factors, we bring unfair pressure on executives of banks who coul ..
Read more at:
http://economictimes.indiatimes.com/articleshow/52425065.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
http://economictimes.indiatimes.com/articleshow/52425065.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
Folowing are few of my blogs written in the past.
There is an old saying that it is easy to market good customers but difficult to sustain them. It is easier to open new branches but difficult to manage existing branches in fruitful and effective way. It is easy to recruit new staff but difficult to make them able and capable to do sound and healthy banking. it is easy to recruit new officers but difficult to keep them in bank for a longer period.
It is easy to keep bosses happy but difficult to customers happy. It is easy to spend money on big bosses on their hospitality but very hard to spend on improvement of customer service and in extension of time bound quality service to customers upto the level of their satisfaction and in delightful manner.And the more important is it is easy to enhance quantity of any element but difficult to enhance quality of them.
It is unfortunate that bankers instead of curing the sick system , instead of removing corrupt officers from top posts, instead of improving Human Resource policy to make it friendly for real performers, instead of accelerating recovery process, instead of providing adequate manpower , instead of strengthening risk management , instead of gearing up skilllevel of loan processing officers , instead of monitoring tools for keeping their asset healthy , instead of saying spade a spade in time and taking corrective action in time against defaulting borrowers or corrupt loaning officers ------------------------------------------------
Bankers always blame interest rate for worsening asset quality or blaming global recession for rise in bad debts or requesting RBI to reduce Repo rate , reduce CRR or pay interest on CRR to earn profit.
Bankers always blame interest rate for worsening asset quality or blaming global recession for rise in bad debts or requesting RBI to reduce Repo rate , reduce CRR or pay interest on CRR to earn profit.
http://importantbankingnews.blogspot.in/2013/11/top-banks-are-top-in-bad-debts.html
http://economictimes.indiatimes.com/wealth/invest/banking-sector-more-bad-news-expected/articleshow/52372316.cms
Board Bureau chief Vinod Rai says it's time for mergers
Vinod Rai, the veteran bureaucrat appointed this year to run the new Banks Board Bureau, told Reuters the government stood ready to inject fresh funds beyond the USD 3.7 billion earmarked in the 2016/17 Budget.
Jaitley to meet public sector bank chiefs on June 6
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