Tuesday, March 20, 2012

Non Performing Assets in Public Sector Banks


Economist Prime Minister says Indian banks are safe and there is nothing to worry for rising Volume of Non Performing Assets. Pranab Mukherjee reasserts by saying that banks in India are maintain adequate Capital Ratio to safeguard banks from disaster. RBI Governor and Deputy Governor say that they will not dilute provisioning norms, income recognition and asset classification norms to help banks contain rising NPA.

Rating Agencies have downgraded rating of various banks including top and biggest bank State Bank of India. Below are some links which tell how confusion prevails in banking circle and why conflicting statement are coming from RBI, Rating Agencies , Ministry of /finance and Chief Executive Officers of various banks.

When people talk of price rise Doctor Manmohan Singh has been making promises to control price rise but he has completely failed. Now learned PM says that price rise indicates that India is in growth trajectory.

When opposition parties cry to help 100 hundred crore poor in the country and discard pro rich policy of reformation, they say that number of poor has come down. For this purpose Manmohan led government has not revised the definition of poverty to bring it in tune with current price position. Three decades ago, a person having annual income of Rs6400 was treated as a person 'Below Poverty Line' and even now a person earning roughly Rs.9000 is called poor. During the same period annual income of salaried class and businessmen has gone up by at least fifty times and prices of all commodities have gone up by same multiple. This is why that number of poor person has come down by 10 % during last five years of UPA rule. And learned economist Manmohan Singh is proud of it. Flatterer leaders of Congress Party treat it a grand achievement. 

Similarly Value and volume of NPA in banks have been increasing every quarter. During last one year it has gone up by 50% as per Government statistics. Now government has set up a new panel to revise NPA norms so that even bad assets could be treated as standard assets as they are treating about 50 crore persons above poverty line by treating a person earning more than  Rs.28 per day as not poor. 

Since top bankers, RBI officials and top politicians are working in nexus with each other they do not want to stop their blame game and neither do they want their brothers in banks are punished for their involvement in corruption. They are bent upon concealing their bad assets somehow or other. RBI have eased CRR and SLR and now likely to consider relaxation in NPA norms.

At best top bankers may make make junior officers as scapegoat if at all they are forced to fix accountability for high value NPA. They willfully ignore the fact that all advances with value more than one crore rupees are sanctioned only after the sanction from top level executives of the bank.

Best way for banks is to submit a false and stereo type certificate to RBI in prescribed format that banks have assessed staff accountability in all NPA accounts. It is different that all real guilty are acquitted. After all , as per inculcated habits and in-built culture of Indians , India is treated good on the basis of certificates given by corrupt set of officers only . Government is least worried of ground reality.

Poor people do not repay bank loan because they are poor and they are confident that sooner or later government will announce waiver of loan. Rich people do not repay because they blame inflation, high interest rate, global recession, natural calamities, and bad weather for their nonpayment of bank loan in time.

If Obama eats meat in USA, economy of India and repaying capacity of Indian business class high profile borrowers is badly disturbed. Obviously when money lent is not repaid in time, it creates asset-liability mismatch and give rise to liquidity crunch.

It is only medium class borrower, middle class people and medium management officials in bank who are sufferers and who have to bear the brunt of bad policies, bad intentions of top officials, bad politicians and the bad systems of the country. On price front too, it prices rise it does not affect rich or poor class, it badly hits middle class dwellers only.

20 MAR, 2012, 04.42PM IST, PTI 
PSU bank NPAs up 51 pc to over Rs 1 lakh crore





21 MAR, 2012, 04.48AM IST, DHEERAJ TIWARI,ET BUREAU 
Panel to advise sector-specific cure for NPAs
14 MAR, 2012, 07.07PM IST, PTI 
RBI not in favour of relaxing norms on loan restructuring, says government

Various news on banks published in last few months will tell the true story of banks

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