Corrupt bank officials and corrupt politicians never own responsibility for bad consequences of bad decision taken by them and their flatterer subordinates. They always put blame for rising NPA on rising interest rate, global recession, inflation, bad monsoon etc and never accept that prime reason for rise in NPA in Public sector banks is that major part of lending decisions are taken not based on quality of borrower but based on bribe money they offer.
It is astonishing that CMD of various banks have told in the recent past few months that continuous rise in NPA in all PS banks is due to the fact that NPA is now recognized by the system. Indirectly they mean to say that they have been manipulating figures, concealing bad assets and showing rosy pictures in their financial statements year after year because the technology based system recognition of bad assets was not in place. Had it been manual recognition of NPA as it was before implementation of Core Banking Solutions (CBS), NPA could have been managed to remain within limit stipulated by RBI and MOF. I therefore usually say that bankers are normally fraud masters and great manipulators and for this purpose they have been getting support from team of CAs and RBI inspectors.
CMD of every bank know very well how bank officers are involved in bribe led lending from top to bottom level. They know there are various constraints in recovery of bad loans and it is not their will to stop bribe led lending because it not only helps in achieving the Himalayan target set by Ministry of finance for credit growth but it also helps in earning wealth for their family and for getting higher and higher assignment. Until an officer pleases his higher bosses, powerful politicians, RBI officials and various lobbyists, he or she cannot dream of promotion and good posting.
Root cause of rise in NPA is therefore not the system of CBS based online recognition but the corrupt culture cultivated by top officials in sanction of loan, recruitment of officers, promotion and transfer of officers and above all whimsical and arbitrary out of turn promotions to officers who flatter to bosses. Merit, sincerity, honesty, talent and experience are seldom respected in public sector banks