Tuesday, November 23, 2010

Identify Bad Bankers

I would like to request RBI or Government of India or Ministry of Finance and particularly to all responsible officials to prepare a list of NPA borrowers in various segment of amount involved and try to know the person who created , supported indirectly through Branches in generation of more and more bad assets known as Non Performing Assets (NPA).

RBI can call for such information from each bank and each branch. Now a day such information can be generated through CBS without any loss of time and without any discomfort. Even controlling officer can generate such list if he or she so likes.Excel sheet can be prepared very easily on following columns.

1. NPA Account with value involved upto Rs.10.00 lacs ( small borrowers)
2. More than 10 lacs to o 50 lacs (medium size borrowers)
3. More than 50 lacs to 5 crores (large borrowers)
5. above five crores. (very large borrowers)

Each segment should contain following columns so that it can precipitate the name of bad bankers.
1. Name of borrowers
2. Date of sanction
3. Name of Branch head
4. Name of immediate controlling head

Then select through excel and filter data as per person on all India basis. It means bank should prepare a list of all bad borrowers which have been sanctioned by a top executive say ED, then General Manager , Deputy General Manager and so on up Regional Head . Such list should be prepared for each and every executive in the bank starting from top scale VII to scale III.

First make a list of big amount NPA borrowers created by regional head or circle head in India during last five years irrespective of his posting (sanctioned directly by him or through branch manager working under him)’

This will indicate the name of executives who created maximum NPA and prove that such officials are getting fastest promotion and all such people are sitting on top post and hence there is none to punish bad officers.

Such executives have very good relation with top bosses and also powerful persons sitting in RBI and banking division. This is why no action is taken against top officials and in all cases of misdeed junior officers are made scapegoat. Such officers if trapped accidently can manage tactfully even CBI or vigilance officials and ensure closure of files or at least ensure awarding of minimum punishment.


This is why there is dissatisfaction in the branches and administrative offices among junior officers in all banks under public sector. Bank officers are least bothered at field level whether NPA is increasing or profit is shrinking. Clever bankers are always expert in making lame excuses of global recession or bad monsoons or debt relief and so on.

Corrupt officers are quickly promoted and posted at good places in big towns whereas good officers who are serious workers are placed at bad places and in critical branches.

It is therefore dire need of the hour to find out l corrupt officers at top level and ensure that they are punished and without which one cannot imagine of NPA coming down in any bank. When top officers will be booked to task , clear cut message will spread upto the bottom level officers and only then officers will desist from corrupt practices and top officers will not post and promote juniors on the basis of flattery of on the basis of golden and diamond gifts they get from juniors.

Only a healthy culture in bank can help in reducing NPA percentage and help in becoming top ranked performer bank.. Hitherto CEOs and EDs in banks are showing lesser percentage of NPA by increasing volume of fresh and short period advances or by selling NPAs to ARCs.

Tuesday, November 16, 2010

Non Performing Assets in Banks

It is not easy to stop corrupt practices prevalent in Public Sector Banks .Work done through contractors or goods bought through suppliers either through tender or without tender are more often than not of inferior quality, everyone knows it. Until management, government, judiciary, regulatory agencies, vigilance officials, monitoring officials, auditing officials and the concerned executing officials are honest one cannot imagine of punishment to guilty officials or to contractors who use inferior materials in construction works or to suppliers who supply lesser goods and inferior goods and charge high value. Banks therefore cannot stop corrupt practices in contractual work related to furnishing of premises or renovation of bank’s branches, ATM centers or administrative offices, but it can definitely stop corruption involved in its lending business. Though it is not easy to make the system fool proof of corrupt practices but a little effort in this direction may help in reducing the level of malicious lending and in turn help in keeping the NPA level as low as sustainable.

But the task of purification and punishment must start from top officials who support, propagate, irrigate and promote corrupt practices in lending. We have to punish top officials who indirectly or directly prefer commission in bulk lending, who aspire for costly gifts from junior officials on financing made by branches and who desire red carpet welcome is extended to them wherever they visit. We have to change rules and practices which discourage honesty and loyalty.

It is worthwhile to keep in mind that top official who are basically corrupt and possess acute greed for money do not leave any witness or evidence which can be helpful in trapping them or which helps in substantiating charge of corruption against them. Top officials manage bribe through a few hard core flatterers in the organization. Such flatterers have strong liaisoning with all high profile personalities in all departments and they can easily manage closure of any file which may go against them and they can shut the mouth of all protestors.

RBI or any other monitoring agencies can at least identify the executive of the banks whose past and present is bad and who are condemned by all. For this purpose they should prepare a list of bad borrowers (NPA) involving rupee one crore and more (to begin with) and try to find out the name of the executives who are responsible for bad lending .There may be cases of account turning bad due to various reasons which are beyond the control of bankers may be ignored, But advances which turned bad due to faulty and malicious processing must be analyzed thoroughly and honestly by a devoted team of bank officials chosen from other banks.

Executives who are instrumental in bad lending and still posted at high places send a wrong message down the line. If corrupt officers are promoted and made organizational head or Branch head or circle head in a bank there is no doubt that junior officials will also indulge in bad lending in greed of money and instances of bad advances will increase. In such system good officials are normally shunted in remote and critical areas and ignored in promotion processes.


It is therefore required to know the name of all loans and advances made by all top executives in past ten years and ascertain whether they are still good or turned bad in a few years or even written off by clever gang of General Managers and cleaver board of directors. Serious analysis of bad borrowers will reveal that creators of all NPA accounts are holding top posts in the same bank of have become ED or CMD of other bank.

If bad executives are replaced by devoted officers of the same bank violating existing promotion policy or transfer policies I think the level of NPA will come down in coming years. Otherwise the deterioration cannot be stopped and banks have to face serious financial trouble in near future.

As a matter of fact dishonesty has become the best policy in all offices owned by the government partially or fully. It is disheartening that even officials who are made for stopping malpractices and for punishing corrupt officials are themselves corrupt. Then who will take action and against whom, only God knows. And this is why it is said that corruption has become the accepted system in India.

Problem arises only when there are differences over the rate of sharing ill earned money among the team of officials who promote bad culture or when top officials receive bribe money but fail to extend desired help to bribe giver.

Lastly if there is a will there is a way. If one wants to lower corruption level in any office or government department there are several ways to accomplish the same. If the head is clean, he can at least endeavor in this direction to some extent, but if the head is dishonest one cannot dream of healthy practices down the line. Unfortunately honest officers are very rare and even there are a few they cannot survive and prosper in their career.

17.11.2010