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Monday, March 5, 2018

Why Privatisation of Banks?

The Reserve Bank of India on Monday imposed penalty of Rs 3 crore on private lender Axis Bank for non-compliance of income recognition and asset classification (IRAC) norms. The regulator said it found discrepancies in the lenders assessment of non-performing assets which warranted a monetary penalty.


Bankers or political leaders or business tycoons or media men who are advocating  privatisation of PSU banks should read above   news which indicates how taxpayers money is unsafe more in hands of private banks than in PSU banks.


If PSU banks are eliminated or given to private sector , exploitation and fraud in private banks will break all past records of frauds and manipulations and ultimately  it is taxpayers and common men's money which will be endangered.


Private banks appear to be safer only because they are master in manipulation of data and in managing  government  officials and RBI officials. They know the art of cheating with rules and get protection from regulating agencies. Chiefs of many PSU banks are also master in this art of window dressing and they too managed officisls for decades during congress party rule. Now slowly they are getting  exposed.


Yesterday ASSOCHAM surprisingly advised the government privatising of public sector bank rather than condemning Nirav Modi for his cheating the Banks. It is very strange and interesting that the Associated Chamber of Commerce, the mouthpiece of the industrialists and business houses has suggested privatization of banks in view of the recent fraud in PNB.  They have conveniently forgotten the track record of private banks in our country.


It will be suicidal for government to go for privatisation  of PSU banks.


Secondly  this idea is practically unrealistic.


Thirdly business men will also weep once PSU banks are privatised.They are digging their own grave by suggesting  privatisation of banks. Because private banks do not lend to corporates or for poverty alleviation as much as PSU banks do.


Fourth government has no plan at all for privatisation of banks.No wise government can even dream of giving their financial  muscle to private sector.


Lastly taxpayers money is more unsafe in private banks than in PSU banks.


The need of the hour is to punish guilty officials wherever they are posted. Habit of searching scapegoat n juniors for each high value FRAUD or NPA and awarding key persons who are primarily  responsible for evils has promoted an evil  culture of flattery and bribery in all departments.  This habit has to be changed  from top to bottom.


Following message taken from social site reinforces my thinking.


Yesterday ASSOCHAM surprisingly advised the government privatising of public sector bank rather than condemning Nirav Modi for his cheating the Banks. It is very strange and interesting that the Associated Chamber of Commerce, the mouthpiece of the industrialists and business houses has suggested privatization of banks in view of the recent fraud in PNB.  They have conveniently forgotten the track record of private banks in our country. 736 Private Banks Failed, Amalgamated, ceased to function/ transferred their liabilities and Assets, went into liquidation between 1948 and
1968.

Private Banks put under moratorium in public interest due mismanagement and gone out of existence from 1969
1969 1. Bank of Bihar
1970 2. National Bank of Lahore
1971 3. Eastern Bank
1974 4. Krishnarao Baldeo Bank
1976 5. Belgaum Bank
1985 6. Lakshmi Commercial Bank
1986 7. Miraj State Bank
1986 8. Hindustan Commercial Bank
1990 9. Traders Bank Ltd.
1990 10. Bank of Tamilnad
1990 11. Bank of Thanjavur
1991 12. Parur Central Bank
1991 13. Purbanchal Bank
1993 14. Bank of Karad Ltd.
1995 15. Kashinath Seth Bank
1997 16. Punjab Co-operative Bank Ltd.
1997 17. Bari Doab  Bank Ltd.
1999 18. Bareilly Bank Ltd.
1999 19. 20th Century Finance Corporation Ltd.
1999 20. British Bank of Middle East
1999 21. Sikkim Bank Limited
2000 22. Times Bank Ltd.
2001 23. Bank of Madura
2002 24. Benaras State Bank Ltd.
2003 25. Nedungadi Bank Ltd.
2004 26. South Gujarat Local Area Bank
2004 27. Bank Muscat SAOG
2004 28. Global Trust Bank Ltd.
2006 29. Bank of Punjab
2006 30. Ganesh bank of Kurundwad
2006 31. UFJ Bank Ltd.
2007 32. United Western Bank
2007 33. Lord Krishna Bank
2007 34. Sangli Bank
2007 35. Bharat Overseas Bank
2008 36. Centurion bank of Punjab

If private banks are really efficient, why these Banks were closed down and merged with others.  Most of these banks were merged with public sector banks. 

PSBs have become the Neelakantha Mahadev to swallow the poison of failure of many private banks and it is funny that Assocham is asking PSBs to be privatized now. 

We understand their greed but they cannot claim that private banks are more efficient.

Secondly, take the alarmingly increasing bad loans in Banks.  Who are the delinquents and who are the defaulters? 

Are all of them not private companies, industrialists and corporate houses ?

 12 cases of NPAs have been referred to NCLT for insolvency and bankruptcy proceedings involving Rs. 253,000 crores.  Who are they?

Are all of them not top private corporate borrowers?

Why they did not repay the loans?

 Is it their efficiency? 

Should banks be privatized and handed over to these people?

In the PNB fraud, no doubt there is an unpardonable sin on part of those officials who have gone out of the way to favour Nirav Modi.

 But who has tempted them and influenced them ?

Is it not private corporate giant Nirav Modi ? 

 Take any major fraud in our country.  One will see the hand of private corporates in it.

Let them not forget that bulk of the loans given by public sector banks are to  private corporate houses.  If public sector banks are not efficient, why do they avail these loans from PSBs and why have not taken such loans from private banks.

Devil should not quote scriptures.  We feel to advice Assocham to ask the private sector corporate defaulters to repay the bank loans to the PSBs and condemn NIMO and others bad borrowers for the fraud they  have committed.

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