When CMD, ED and most of General Managers and Dy GMs are corrupt, every manipulation to project bank's false image is possible. Such bad officials who hold the unrestricted and unregulated powers on lending can conceal bad accounts in several ways, they can write off or compromise with defaulting borrowers at the cost of bank’s health, or give fresh advance to stop bad accounts slipping into NPA category and what not.
When top officials are corrupt they promote corrupt juniors, post corrupt auditors, and corrupt vigilance officers to make inquiry into charges of bribery and close the chapter related to flatterers. They try to protect their subordinates who indulged in bribe led lending and who honestly share the ill earned money with their bosses. They not only protect corrupt juniors but also ensure out of turn promotion to such corrupt juniors.
Bulk financing helps in reducing Net NPA and Gross NPA ratio of a bank. But actual quantum of bad loans is increasing rapidly primarily due to bribe led lending culture prevalent in public sector banks.
To add fuel to fire bad loans worth lacs of crores of rupees have been concealed by management of bank on some plea or the other. Even RBI cleverly helps such bad officers to boost up bank’s image and to tell a success story to Ministry.
Besides RBI officials are also manipulated by extending gifts in cash or in kind. Intrinsic value of all Public sector bank is facing erosion, quantum of NPA is rising year after year and on the contrary officers who sanctioned directly or indirectly loans after taking bribe are allowed safe retirement by making a few junior officers who sign on papers as scapegoat for all evil works done by top officials through phone and verbal instructions.
It is not astonishing that advances in crores sanctioned by corrupt executives become bad in a year or two and even then controlling officials sitting at top posts close their eyes and ears because they are beneficiary of bribe which a Branch Manager receives on sanction of a credit line.
Auditors and Chartered Accountants are easily managed by offering precious gifts and by extending red carpet welcome to team of auditors so that they can treat such bad loans as standard and save corrupt officials from punitive action.
Even after large scale manipulation done by bank officials in collusion with top officials, committing fraud with CBS system and even after frequent rephasement, rescheduling and restructuring of bad advances, public sector banks have added thousands of crores of rupees in the financial year ended 31st March 2011.
Much more NPA is to be added in forthcoming quarters in 2011-12.Profit is artificially shown rising by clever team of top officials but actual profitability of banks is going down year after year due to continuous rise in NPA.
It is worthwhile to mention here that these banks did not make adequate provision for Pension and gratuity payment to prevent banks slipping into red.
Total amount of NPA in banks is rising year after years and our Finance Minister have expressed concern for the same several times but the corrective action has not been taken at field level because they are also beneficiaries of bribe culture.
Real health of bank can improve only when CBI officials honestly assess the assets of top officials and punish them to demonstrate that evil doers are not spared. Unfortunately even CBI officials become victim of bribe and corrupt system.
This is why health of government controlled banks in general is growing weakness and there is no doubt that sooner or later they have to face either closer or merger with strong bank as usually happened in the past.
Only appropriate punishment to top ranked official working or retired who promoted bad culture in banks can help curing the cancer of corruption rampant in banks
Keeping in mind the illustration of a bank mentioned above, it can be added here that when Head of any department or any office or any public sector undertaking or private firm is incapable and corrupt the future of that office is doomed, one cannot doubt in it. Similarly when Head of the country is corrupt one can imagine the fate of the country .I am unable to understand how Right to Recall will be able to remove culture of flattery, bribery, nepotism and redtapism from administration and politics. It is not clear to me how one can ensure through RTR the respect to meritorious and honest performers and stop mockery of merit and honesty.