Thursday, August 22, 2013

NPA In Banks Will Go Up AND UP

If government is really interested to know the ongoing fraud in bank in sanction of high value or low value loans for last two decades, CBI should first investigate the wealth of retired CMD and current CMD, ED and all General Managers of all public sector banks and try to compare the same with their total income earned during their entire service. Then only CBI and GOI can assess the volume of corruption rampant in this sector in the name of credit growth or achievement of set targets or to please the politicians especially ministers who hold the key of promotion of bank officers.

Unfortunately Ministers are Godfather of all such corrupt officers who have spoilt the future of banks. When the head of any institute is inefficient, inactive and corrupt, one cannot dream of good governance and similarly when government is formed of corrupt ,inactive and ineffective ministers , one cannot imagine of clean administration.

Until we get success in getting rid of rampant flattery and bribery culture and until we stop whimsical transfers and arbitrary promotions in all government offices and public sector undertakings we cannot imagine of improvement of health of any bank or any PSU or any government office. The culture of flattery is the root of all maladies prevalent and rooted in the entire system.

Bank staff who are wondering in dreamland expecting wage hike of 20 or 30 percent should keep in mind that until they save banks from corrupt executives and corrupt officials they cannot expect earning high profit and when profit is low , banks cannot think of giving respectable wage hike.Politicians have spoilt banks by their dirty vote bank politics and when banks incur losses they will blame bank staff only.

Assets in banks will continue to move from standard to Non performing assets and none can stop it without changing the mindset of rulers. Now stress assets are reflected as 5 to 6 percent and it will move to 20 to 30 percent of total advances if the system is not changed immediately. FM or RBI can prescribe hard dose of medicine but they cannot yield fruitful result without the support of all involved in the process. Dirty politics of vote bank has damaged not only the economy of the country but badly affected the social harmony, regional harmony and communal harmony.

This is why why there is Free Fall of Indian rupee In Free Market despite all efforts made by learned FM, PM and RBI governor.Because the fall is not due to fault occurred in last few days or few  months, it is the consequence of bad policies followed by team of economists ruling this country from Delhi. Similarly accumulated bad assets in public sector banks are not due to global recession or due to natural calamities, they are the bad consequences now precipitating due to bad policies and bad execution of good policies by bad officials sitting at top posts in these banks in nexus with corporate and politicians.

NPAs of banks could rise on account of slowing economy: PMEAC--ET

NEW DELHI: Prime Minister's key economic advisor C Rangarajan today indicated banks may have to deal with higher non performing assets (NPAs) on account of poor economic performance.

"NPA also increases because of the way economy behaves. If rise in bad loan is beyond control of banks, then banks need to be very careful in identifying NPAs," Rangarajan said.

He was speaking at the 5th Conference of Central Bureau of Investigation (CBI) officials and Central Vigilance Officials (CVO's) of Public Sector Banks.

"While judging increasing NPAs, banks should also take note of what is happening in the environment. Some amount of loan can for a time become NPA," Rangarajan added.

Non-performing Assets (NPAs) of banks have been going up for the last two years due to slowdown in the economy. The gross NPAs of some public sector banks, including State Bank of India and Punjab National Bank have crossed 4 per cent of the total assets at the end of March, 2013.

Pulled down by poor performance of farm, manufacturing and mining sectors, Indian economy slowed to 4.8 per cent growth rate in the January-March quarter of last fiscal year and fell to a decade's low of 5 per cent for the entire 2012-13 fiscal.

Gross non-performing assets (NPA) of public sector banks rose to Rs 1.76 lakh crore at the end of June quarter from Rs 1.55 lakh crore at March 31, 2013.

According to global rating agency Standard & Poor's, India's banking sector's non performing assets (NPA) ratio is likely to surge to 3.9 per cent of total loans in 2013-14 and to 4.4 per cent in 2014-15, compared with 3.4 per cent in fiscal 2012-13.

Recently, Minister of State for Finance Namo Narain Meena, in a written reply in the Rajya Sabha, said the NPAs of banks have shown a rising trend.

The stress on the asset quality is a reflection of the stress in the economy of the country.

Public sector banks had recovered Rs 1,905 crore by filing 97,701 suits in 2012-13 and Rs 1,700 crore through 79,117 suits in the earlier fiscal.

Yet ad hocism still rules the roost in the selection process, and most public sector bank chiefs have a short tenure of two years or a little more. This means many of them spend the first few quarters cleaning up the balance sheet to prove that their predecessor was not a prudent banker - but as their retirement approaches, they fall into the same trap and stop declaring bad assets to show better profits.

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