Vinod Rai Medicine To Cure Banks

IOB symbolises a larger problem seen in the public sector banking space. PSBs are suffering from inefficient managements, government intervention and tough competition from private rivals.

 Many state-run banks are facing serious asset quality issues.

There are at least four more state-run banks with NPAs above 10 percent. These are United Bank of India (14.29 percent), Punjab National Bank (13.75 percent), Andhra Bank (10.30 percent) and Union Bank of India (10.16 percent). There are two more with over 9 percent GNPAs, Canara Bank (9.71 percent) and State Bank of Travancore (9.38 percent)

All of these will require substantial amount of capital infusion from the government. The bigger question is how much of these funds, which ultimately use the taxpayers money, 

Modi Has To Review Bank's Health 

Conclusion

Public sector banks which used to be  considered Top performing banks  a few years ago are now topper in Gross NPA. Chiefs of banks who were considered star performers a few years ago are actually responsible for such pathetic position of banks they headed . 

But unfortunately those clever , corrupt and hardcore manipulators got cream post in RBI or elsewhere even after retirements and they are not held accountable for mess they created in the banks they headed.

. In brief, you may conclude without any hesitation that majority of so called star performers of last one to three decades are solely responsible for current critical health of banks they were associated with. 

Politicians who  were in power in last decade are prominently responsible for creating bad debts and then hiding them or writing them off in nexus with top bank officials.

 It is further unfortunate that bankers who caused damage to health of banks are now made doctors to submit reports on causes of rising bad debts. Officers who sanctioned hundreds and thousands of crores of rupees to bad borrowers only to earn costly gifts and to influence Finance Ministers of their time got a quicker promotion, cream postings and finally safe exit from Bank and got lucrative post even after retirements are now talking of economic recession or global slowdown to protect themselves.

As a matter of fact, in hardly  five to ten percent of bad accounts in PSU banks ,reason for account turning to bad category may be attributed to economic recession or global slowdown or unavoidable circumstances. But it is bankers, politicians and other related officers who are responsible for creating ninety percent of bad debts in PSU banks.

 It is important to note here that private banks have booked higher profits in every succeeding quarters during last one decade and under same economic conditions and same global situation. Volume of bad debts in private banks is hardly one to two percent whereas that in PSU banks is more than five percent and more than 25 percent in all if hidden bad debts are honestly exposed.

It is advisable that Finance Minister Mr Arun Jaitley ,PM Mr Narendra Modi ,RBI Governor Mr Raghuram Rajan and BBB chief try to go deep into real causes of rising bad debts and punish guilty officers and politicians  . This will send an alarming message to corrupt bankers and politicians and force them to give value to real performance and refrain from giving value to flatterers and bribe earners.

Government will have to use CBI, CVC and other anti- corruption bodies to keep close eyes on each officer dealing in finance or influencing lenders. 

Country cannot afford frequent infusion of capital to save banks from disaster. It is totally injustice to punish innocent taxpayers and common men for fault of top bankers and politicians. Due to mismanagement  of banks , common men are not getting enough interest on their savings and taxpayers are forced to pay higher taxes.

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After all Sri Vinod Rai has understood the gravity of bad loan problem faced by PSU banks.I have been saying since long that merger and consolidation of banks cannot solve the issue of bad loans, rather it may add fuel to fire. NPA has been increasing since long and it will continue to rise .

Banks are not sick but critically sick due to NPA problem and there is no hope that sickness will get reduced until bankers and politicians change their attitude and until they stop culture of flattery and bribery

FM Sri Arun Jaitley and Sri Vinod Rai chief of BBB have to understand root cause of problem lies in bad HR policy and large scale corruption in execution of HR policies. They have to understand that politicians are big exploiter of banks for their self and vested interest.

Government have to ensure that talented,skilled and experienced Bank officers are given due respect and given timely elevation . They have to stop flattery and bribery based recruitment and promotion. Similarly they have to stop target based lending and hocus on need based and quality lending only.

Government has to ensure that bank officials do not  sacrifice bank's interest for achieving target of lending or for earning bribe in sanction of loans or in write off of bad loans or in take over of loan from other banks by offering undue concessions and violating normal laws of ethics.

Government has to ensure that cases filed by banks for recovery of bad loan amount from defaulters are disposed off by courts in 30 days to 90 days.

Government has to ensure that politicians do not recommend sanction of loan for any person or corporate and then build pressure on bank officials.From village level staff to top level officers of Ministers use their power to exploit PSU banks and this is why NPA. Creation has been relentlessly  rising  without any checks and cross checks. Auditing and vigilance officers are also dancing as puppet in the hands of corrupt top officials in greed of quick promotion and choice posting.

Government has to stop unwarranted expansion of branch and ATM network. PSU Banks are competing  with among each other and not with private banks. Even government funds are sold by government officials to private banks if they get such opportunities.

Merger and consolidation is not the solution to sickness of PSU Banks. It will rather aggravate the sickness.

I do not agree that rise in bad debts in PSU banks is purely due to poor knowledge or lack of skill of banking oificials who take part directly or indirectly in process of sanction of a loan. Lack of knowledge is definitely one of many reasons causing continuous rise in volume of stressed asset but not an exclusive or significant big reason.

Government is willingly and strategically hiding prominent other reasons and trying to protect corrupt bank officials  and ill- motivated politicians who are solely and jointly responsible for causing critical sickness in banks.

As a matter of facts all frauds and bad lending is possible only in PSU banks  and have been taking place in banks for years and decades only due to and with the clever mind of talented and clever officials and politicians who apply their brain to loot banks for their self interest at the cost of bank's interest.

I have no doubt that proposed steps to cure banks by Vinod Rai or ministry of finance or by FM Mr Arun Jaitley will not get desired success in reducing sickness.

Government cannot solve the problems faced by banks until they stop flattery and bribery in  posting, recruitment  and promotions. Government cannot do any good work for betterment of banks until they stop misuse of elected political representatives and their followers who build pressure on bankers for lending to persons as and corporate of their choice. They cannot cure sickness  and they cannot stop rise in bad loans until they make legal, political as and police set up active, effective and corruption free. Entire system is defective and they are pro dishonest borrowers, corrupt bankers ,corrupt administrative officials, corrupt judicial persons, corrupt advocates, corrupt chartered accountants, corrupt valuers, corrupt engineers, corrupt vendors and corrupt political leaders. God bless them all.

Feedback on PMO site submitted  on 11.08.2016
Title of the site is interact with PM or put your suggestion. PMO site diverts the writer to grievance site. I do not have personal grievance. But the issue related to health of PSU bank is a matter of concern not only for me but for 125 crore people of india. If banks collapse, it will create grievance from crores of Indians.

 Is it not wise to bring the issue in the light of government?

 For last three decades ,health of banks has been consistently deteriorating. I have great expectation from PM Modi. That is why, it is not wise decision to ignore valid points raised on this subject.

 Real reform will take place only when government removes all negative points. Mere preaching positive sermons have caused a great damage to nation .

please take up the matter on topmost priority. Treat this as grievance of crores of common men who are unable to express their resentment in words.

Banks are victim of ill- motivated politicians and bankers . It needs drastic change in culture , not only Chang of policy or change of bottle without change of wine.