Thursday, May 03, 2012

Officers got Promotion by Window Dressing

Senior bank officials working as Branch Head or Regional Head or Circle Head or Zonal Head or Central Head, all have barring some exceptions resorted to window dressing in the past and it is their mastery in art of window dressing that they continued to be blessed with  one after other promotions superseding honest performers.

They not only resorted to window dressing for deposits but also for advances.RBI never took notice of it or one may say that they indirectly supported this unhealthy and unethical practice prevalent in public sector banks in the name of achievement of targets.

Bank officers paid abnormal rates of interest for short term deposits and achieved the target of deposits. Bankers then motivated high value borrowers to withdraw their unavailed portion of sanctioned limit on closing days and park the same in their deposit account. In this way they made artificial jump in deposits and advances in last few days of closing year or closing quarter.

This fraudulent method of achieving target jeopardized the career of hundreds of senior officers who did not resort to window dressing and these officers were sidelined, posted at critical places and finally rejected in all promotion processes. There have been hundreds of senior officers who are expert in window dressing of advances too. They arrange short target valued clients to avail short term loan even if the corporate do not need and finally compensate them in different ways.

These corrupt bankers have caused huge loss to banks by paying abnormal interest for short period and by providing sub-PLR rate on advances to big clients who obliged them during closing period. All this caused huge loss to tax payers, investors and those who kept their hard money in saving deposits. Not only this these officers played big role in creation of bad assets in banks and finally writing off of big values loans .Volume of NPA was always concealed by these clever bankers and now on CBS they are getting exposed . Gross NPA of banks has made a new top and gone beyond control.

Finally when bank incurred loss or earned less profit, even wage revision of staff was treated by Ministry in casual manner and ultimately all staff had to bear with nominal or negligible rise in their wages. 

Who will after all punish these corrupt officers who have been using their flattery and bribery powers to buy the good wishes of ministers and RBI officials and who have been buying even vigilance officials to close their files related to corrupt activities?

After all why RBI officials and Ministry of Finance maintained silence for decades together is a mystery? Most of senior banks have got blessing of some ministers or some officers in MOF or RBI and this is why they not only get before-time promotion but also get safe exit at the time of retirement even if they committed hundreds of irregularities in their posting at various offices.

Window Dressing Continues As Usual in Banks

Following is news item published in valued newspaper The Economic Times Today 4th May 2012 which substantiates various stories of fraudulent activities of top bankers coming into light from time to time.

Public banks face cap on costly year-end deposits

NEW DELHI: The finance ministry mulling a limit on the bulk deposits the state-run banks can raise in the last quarter of the year, worried that the year-end race to window dress accounts through costly bulk deposits can adversely affect profitability and asset-liability management of banks.

In the just concluded financial year, banks raised nearly a third of their total deposits in the last month of the year.

Finance ministry is keen to end this race for deposits that unnecessarily distorts the structure of interest rates.

"..It appears that in order to garner deposits and increase balance sheet size, banks tend to raise deposits and certificates of deposits at very high rates....Mobilization of such deposits unsustainably high rates, is not only likely to adversely affect the profitability of banks but also the asset liability management of bank," said a note sent out by finance ministry seeking views of public sector banks on the proposal.

It has suggested that the bulk deposits raised by the government banks at higher than the published rates (card rate) and certificates of deposits mobilized in the last quarter of a financial year should not be more than 20% of the total deposits mobilized in the year.

In addition, the ministry has proposed that at no point during the year bulk deposits raised at higher than card rate should exceed 20% of the total deposits.

Bank deposits rose nearly 3 lakh crore in the last month of the last financial year, about a third of the total accretion in deposits in the entire year.

The interest rates on certificates of deposits, or CDs, the instrument used by banks to raise bulk or wholesale deposits, rose to a maximum of 11.5% by March, over 150 basis points from the end of December.

The latest RBI data shows that scheduled commercial banks raised nearly 61,950 crore bulk deposits in the fortnight to March 9, against 38,800 crore raise in the preceding fortnight.

Banks sometimes resort to this year end rush to show better performance.

The banking regulator, the Reserve Bank of India, or RBI, has taken note of the wide divergence in the retail and bulk deposit rates. A senior RBI official had said late March that the practice was wrong.

State run banks are not enthused by the dictate, which they say could impact their business.

"Garnering deposits is a market function and mobilization is dependent on market conditions," said a chairman of a public sector bank who did not wish to be named.

Another official with a public sector bank said it could compromise their competitiveness.

"PSBs also have to compete with their counterparts from private sector who enjoy full freedom and are expected to show equivalent growth...These restrictions will be of little help in terms of growth," the official who did wish to named said.

He also added that a large percentage of this was deposit from the state-run companies.

But independent experts said in the long run it could help state run banks by focusing them on stable deposit mobilization.

"If one were to impose a limit that is too low compared to existing levels, it could be disruptive but it could push PSBs to mobilise more granular and stable deposits, improving their funding profile over long run," said Vibha Batra, senior vice president, co-head, financial sector ratings, ICRA.

AIBEA to go on strike against decision to close rural branches
BS Reporter/Chennai - May 04,2012 00:15 AM
The All India Bank Employees' Association AIBEA has threatened to go on a strike against the government's proposal to close down ‘non-viable and loss-making' rural branches. The association said that closing down the rural branches meant defeating the purpose of social banking.
In a letter to the ministry of finance, AIBEA general secretary CH Venkatachalam said, "We are aware that rural branches tend to be in losses due to the lack of adequate remunerative business in these remote areas. But still rural branches are very important for taking banking to the villages and to the common masses. While no one is against profits, objectives and responsibilities of social banking cannot be lost sight of.&"
He said that the government had suggested that loss-banking branches should be re-located. This means that rural branches will be closed down and would be shifted to semi-urban and urban areas in the name of more business and profitability. The obvious causality would be the rural branches, he said, adding that the government had also suggested down-sizing as one of the strategies.
This means that the existing staff in these branches will be reduced. In many rural branches, employees, officers and managers are already finding it difficult to cope with the increasing volume of work on account of dealing with large number of accounts pertaining to the NREGA scheme and no-frill accounts. If the staff is reduced in the name of profitability, the staff in these branches would further suffer, he said in the letter.
In a separate letter to all the officer bearers, federations and bank-wise organisations, AIBEA said that it was strongly opposing the government's moves and measures and asked all the units to be ready for serious agitational programmes and strike actions if the government would move ahead in this regard.

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