Why PSU Banks in General Are Sick ?

Public sector banks are  sick due to dirty politics of vote bank which promoted loan Mela & loan waiver schemes. Loans are sanctioned,  more often  than not, to achieve  the target and earn undue money and not to strengthen  basics of bank and earn profit for the bank. 

 Policy related to lending are more often than not overulled and ignored to sanction loan to a bad promoter and on the contrary rules after rules are framed to decline a loan proposal submitted  by a good business house. This happens because people in power have an intention of earning  illegal benefit for self before sanctioning a loan proposal sacrificing  principles  of lending.  There are numerous  officers who do not know how to assess a loan proposal but holding powers to sanction or decline a loan. Loans are sanctioned  by such officials under pressure  of either big bosses or mafia customers.  Sometimes  government officers and ministers build undue pressure  on big bosses for sanctioning  loan to their close persons and corporate  houses. 

Banks are sick due to torture  to good workers and undue favour to corrupt  employees  in transfers & promotions. There exists a policy of flattery and bribery. Employees who are perfect Yesman,  who know art of earning bribe and sharing with bosses,   who know the science  of polishing powerful higher officers and who know the art of managing customers are assigned important  departments whereas knowledgeable  persons are thrown to remote places and assigned the most critical  task. This creates, irrigated and promotes  a culture of flattery  and bribery. 

Inexperienced and unskilled persons dictate skilled and experienced. This generates negative feelings in good workers and keep them in fear always. Fear of nothing but transfers to critical places time and again. 

Banks are sick because bank employees  are not getting  adequate  pay packages  as compared to their counterparts  in other departments and sectors. Few decades ago bank officers  used to get wages more than IAS and IPS officers whereas now they get pay package worse than a central  government  staff. 

Banks are sick because  corrupt are not punished in shortest  possible time and many times awarded whereas sincere,  honest and talented  employees are posted at remote,  critical or unproductive  places. Management  is incompetent  in many respect. They do not give value to interest  of the organization but value their own self and their relationship. 

Banks are sick  because bank staff do not get administrative,  judiciary, political  and moral support when take action against  loan defaulters. Cases in court are pending for decades because borrowers manage courts through advocates by paying plenty of fees. Even if cases are decided in favour of bank,  administrative and police machinery  do not help bank in recovery  of dues from defaulting  borrowers,  rather they avoid action against erring persons after taking some gratification from defaulting  borrowers. High profile officers take in bad accounts, sanction compromise settlement sacrificing interest and principle  loan and even write off loans on flimsy grounds just to fill their own pockets or to fulfill  targets of  recovery. 

Bank are sick because  auditing is poor and full of corruption .CAs who audit balance sheets and   Valuers who value assets of customers and banks are not having required sincerity and honesty. They follow and teach manipulative tactics more than following prevalent  laws and acceptable  business ethics. Chartered  Accountants draw balance  sheet as per requirement  of loan and for this purpose  they manipulate all papers,  facts,  figures and documents. Similarly  valuers, advocates,  engineers manage papers in view of higher fees. 

Banks are sick because government  is sick and suffering  from various prejudices. Government think it is easy to infuse capital in sinking banks than to diagnose  the sickness properly and effectively at the root so that the sickness does not recur time and again. This is the key reason that the amount lost due to frauds has been increasing  rapidly year after year  and has reached from a few hundred crores of rupees in  year  in last decade to more than a lakh  crore  of rupees in the current financial  year.

And so on..........

Also read my old article on the subject 

How to contain NPA

https://importantbankingnews2.blogspot.com/2016/02/what-is-npa-and-how-to-contain-it.html


https://importantbankingnews2.blogspot.com/2015/05/bankers-politicians-and-auditors-all.html