In one of the report published by RBI it is said that total of Non Performing Assets in Public Sector banks in India is likely to remain maximum 3% of total advances. I fully differ with this conclusion . I suggest RBI to demand report from all PSBs in following format to know the real truth of health of the bank and to know how corrupt executives sitting at top posts are manipulating the system and cheating with not only with the investors but also endangering the very survival of the banks.
Name of Bank
Name of CMD and ED
Number of Branches
Number of Regions or Circles or zones
Number of branches zone wise
Total Advances of each region minus advances disbursed during last three years minus advances outstanding in branches opened during last three years.
New advances have been deducted out of total advances assuming that bank is making good advances and hence in a span of one to three years the asset will be standard as per RBI norms.
Proportion of NPA out of total advances thus arrived will tell about reality of health of a particular branch.If stressed assets and restructured assets are also added to total NPA of that branch I am very much sure the resultant outcome of such analysis will be enough to open the eyes of regulators public sector banks and officials in Banking Division and that of politicians and ministers
If total NPA of any branch is more than 20% it should be assumed that health of that branch is poor.
If total NPA is more than 30% it may be said that the branch is critically ill and
If total NPA is more than 50% of total advances as on 30th June 2011 such branch may be treated as almost dead and existence of such branch may cause threat to health of that bank in the long run.
Moreover Character of individual who is head of such critically ill branch must be assessed. His past performance should be investigated, his linkage with higher officials should be traced, his assets and liabilities should be assessed, role of top officials must be assessed to know how much they got as share of illegally earned money by branch head , CBI should conduct investigate how much has been the role of bribe in credit sanctioning at branch level or regional level , legal or manpower constraints faced by the branch and how much money has been paid by branch head to members of Interview panel or to officials of controlling head office in getting promotion or in getting good posting.
Similarly if 10% of branches in any region are having more than 50% of advances as NPA it may be said that Regional Head of that branch is having poor monitoring and having malicious intention and such Regional Head have been given promotion in the past through unfair means, through back door and through recommendation of some top officials.
If more than 50% of branches is having more than 10% of advances as NPA, it may be said that there is lack of control on branches under his supervision and there is role of bribe in keeping silent on evil works of branch officials.
If more than 25 % of branches are having more than 20 % of total advances as NPA there is complete failure of monitoring tools and there is greater role for corrupt officials in promotion and posting.
If more than 25% of branches are having more than 30% of advances as NPA such regional Head may be categorized as the most corrupt Regional Head.
In this fashion RBI may devise its own framework to decide branch wise and bank wise health of public sector banks.
What I mean to say ere that RBI must conduct branch wise analysis of every bank to assess and ascertain the real health of the bank. Only by making bulk advances and opening new branches or by writing of bad advances time and again or by concealment of bad advances any bank in India cannot safeguard future of the bank. Only by knowing the true story of each bank RBI can strike at the root cause of ill health of the bank which may be any one or all of following
Flattery and bribery based recruitment, promotion and posting of officials
Legal constraints due to which banks are unable to recover money from defaulters
Manpower shortage, poor salary package, poor monitoring, poor knowledge, out of turn promotion causing frustration among subordinates, recruitments of direct officers in scale III or IV or V on the recommendation of top ranked officials of the bank humiliating senior officers of good past record available in banks and so on
Political reason like loan waiver announced by various state and central governments leading to disastrous culture ,forced compromise formula imposed by RBI or politicians giving verbal orders promise made by local leaders that loan will be waived sooner or later
Global reasons such as financial crisis all over the world, war on the border, global recession etc
Election eve concessions given by various political parties and so on
Name of Branch
Percentage of NPA
Sick, critically ill ,almost dead, fit for closure etc
Similar tabular statement may be asked from each bank region wise to assess the performance of various regional heads such as GM, DGM, RM etc and performance of bank heads such as ED and CMD.
Role of ministers and top RBI officials in the process of selection and appointment of ED, Director and CMD of a bank may also be looked into to know the truth that corruption flows from the top and not flows up from bottom to top.
Where lies the root cause of sickness of any branch or bank need to be ascertained as soon as possible to safeguard banks in India and it is wise not to believe entirely on financial data furnished by various clever bankers in different format.