Why recovery of bank loans is poor?
Why bankers keep mum on account turning bad or use evergreening process to keep a loan account standard or restructure bad loan on flimsy grounds to keep the account in standard category?
Why bank management think it better to write off bad loans or sacrificing large smount in arriving at a compromise settlement with a defaulter?
Why bank management think it better to write off bad loans or sacrificing large smount in arriving at a compromise settlement with a defaulter?
Prime and dominant Answer is following one among many other reasons.
It is mainly "Because of dirty politics of politicians"
Read following news which stops bankers in taking action against defaulters and which finally make them corrupt too.
Karnataka GOVT minister said in last few days
"If the bank managers did not oblige, they would have to face action. “The bank managers will go behind the bars if any farmer commits suicide,” he said."
In eighties one key minister of the then congress party government namely Mr Janardhan Pujari Dy FM promoted loan mela culture which forced bankers to compromise with bank norms of lending. In successive years Mr. Devi Lal as Chief of Haryana state and Mr. V P SINGH as Chief of the country taught bankers to write off bad loans . Then ministers like Mr P Chidambaram taught bankers how to restructure and evergreen bad loans to keep bad loans in standard category life long.
In such political environment bank officers also became habituated in making ill motivated decisions in sanctioning of loans and in getting rid of bad loans. They all brightened their own career by using such evil tactics and caused enormous damage to intrinsic value and health of public banks. And we are witnessing consequences of their bad culture.
In such political environment bank officers also became habituated in making ill motivated decisions in sanctioning of loans and in getting rid of bad loans. They all brightened their own career by using such evil tactics and caused enormous damage to intrinsic value and health of public banks. And we are witnessing consequences of their bad culture.
Then successive governments used weapon of Loan Waiver or writing off of bad loans to enhance their vote bank and to increase their winnability in elections. In such environment where dirty culture became normal culture , BANKS had no option other than going sick and growing sickness year after year.
As long as government do not put stress on recovery and keep distance from target oriented lending, one cannot dream of good health of public banks.
And politicians who are in power have bigger role to play to introduce a good culture in banks. At the same time opposition parties have also to follow certain ethics while targeting a ruling party. They all have to learn how to refrain from using banks as tool to increase their vote bank and stop exploitation of banks without delay.
And politicians who are in power have bigger role to play to introduce a good culture in banks. At the same time opposition parties have also to follow certain ethics while targeting a ruling party. They all have to learn how to refrain from using banks as tool to increase their vote bank and stop exploitation of banks without delay.
Government must make strict laws and enforce laws strictly to penalise politicians who interfere in functioning of bank only to serve their political agenda.otherwise even God cannot protect banks facing disaster.
As per data from the Reserve Bank of India, 21 state-owned banks wrote off Rs 3,16,500 crore worth of loans. And for the same period, they are said to have recovered Rs 44,900 crore written off on a cumulative basis, which is less than one-seventh of the write-off amount, as reported by The Indian Express.
Link to Indian Express
Karnataka minister has now crossed the limit and threatened bankers of stern action against Them if they issue notice to defaulters. It means recovery of Loan is fully dependent on honesty and mercy of borrowers . In addition to it bank management threaten to bank officers of critical postings and failure in promotion process if they fail to achieve non-achievable targets imposed on them strictly as per whims and fancies of controlling bosses.
Here it is worthwhile to mention that targets fixed for various officers are not based on potential of the area or based on available resources but as per sweet will of higher officers.
RBI has always been silent spectator of all these I'll motivated activities until huge loss is caused yo the system. Similarly Government of India and state government silently allows all misadventures taking place .They are birds of same feather and enjoy thrir power and position only yo brighten their own image and wealth.
Let us now hope that GOI will at least now become serious and protect our country from facing a financial disaster. They should give a mandatory training to all elected representatives to make them aware of financial discipline and warn them of strict action in case they violate the standards of discipline .
As per data from the Reserve Bank of India, 21 state-owned banks wrote off Rs 3,16,500 crore worth of loans. And for the same period, they are said to have recovered Rs 44,900 crore written off on a cumulative basis, which is less than one-seventh of the write-off amount, as reported by The Indian Express.
Link to Indian Express
Karnataka minister has now crossed the limit and threatened bankers of stern action against Them if they issue notice to defaulters. It means recovery of Loan is fully dependent on honesty and mercy of borrowers . In addition to it bank management threaten to bank officers of critical postings and failure in promotion process if they fail to achieve non-achievable targets imposed on them strictly as per whims and fancies of controlling bosses.
Here it is worthwhile to mention that targets fixed for various officers are not based on potential of the area or based on available resources but as per sweet will of higher officers.
RBI has always been silent spectator of all these I'll motivated activities until huge loss is caused yo the system. Similarly Government of India and state government silently allows all misadventures taking place .They are birds of same feather and enjoy thrir power and position only yo brighten their own image and wealth.
Let us now hope that GOI will at least now become serious and protect our country from facing a financial disaster. They should give a mandatory training to all elected representatives to make them aware of financial discipline and warn them of strict action in case they violate the standards of discipline .
Excellent revealation and exposure of Bank and Bankmen fate since 1980s.It is slow poison injected since then in Bank life to make it sick and degenerate in aa systamatic manner.Only Sri Raghuram Rajan ,Governor of RBI, had resisted the write off culture..
ReplyDeleteBut politics ruled financial ethics, and Banks were made scape goat...
The entire ills of banking today is creation of congress govt since Janardhan Poojari time. First they showed as if they are doing all these for farmers, artisans, minority community etc...Once got things moving as per their wish they extended this more to Big Industrial Houses and Benami INdustrial houses and looted bank money [public money]. banks have to be released from the clutches of politicians and that is the way to resolve the crisis
ReplyDelete