stagnation in pay scale
I will definitely expect that leaders will remove the word stagnation in pay scale of officers. I feel pity for those experienced officers who have all talent and who are hard workers but could not get promotion due to many constraints beyond the control of officer. But due to constraints before management, senior officers reach last stage of their scale and they are denied annual income.
When number of vacancies is less in upper scale, management is constrained to give fewer promotions and when such senior officers are good worker, they must be entitled to get at least annual increment.
I feel pity for such senior officers because they are not getting annual increment after they reach last stage of their scale even when they are shouldering responsibility of large branches successfully. On the contrary non performing clerks as well as officers get annual increment only because they are junior.
Obviously the word stagnation is deceptive and a curse for senior officers. In olden days when officer was not found fit for promotion due to inefficiency he was to face stagnation as mild dose of punishment. This used to happen when promotion based on seniority used to take place and management used to give promotion even if there were not adequate vacancies in that scale.
In most of the central government department there is provision for time bound promotion and hence question of stagnation in particular scale does not arise. It is perhaps only in banks that even after completing twenty or thirty years of service in a particular scale promotion is not given to an employee. Now-a-days Interview is a killer injection in the almirah of management which can be injected to any good or bad performer in promotion process as pe whims and fancies of the interviewer.
In brief there is no justification for stopping increment for two three years to a senior officer in the name of stagnation. If management feels that there is no scope for promoting officers in a particular scale to upper scale in lack of adequate vacancy , they must keep the scale long enough to accommodate senior officers and ensure that they continue to get increment every year until there is report of any misconduct or inefficiency.
When leaders and bank management can give relief to retired employees, why can’t they agree for continuous annual income to those who have reached last stage of their scale?
Here I would like to add that when management finds an officer guilty of minor misconduct they penalize him by stopping his one annual increment for one year without cumulative effect. It means disallowing an officer for increment for two three years in the name of stagnation, or for the reason that he has reached the last stage of his pay scale is tantamount to penalizing him with more greater penalty for none of his fault.
If management finds an officer unfit for promotion and unfit for release of annual increment in the name of increment they are not justified in entrusting such stagnated senior officer with higher responsibility such as Branch Manager of large branch, rather they should prefer junior officer to should responsibility of bigger branch. It is undeniably ridiculous that most of senior middle management officers and most of the executives in Scale IV to scale VII are not getting annual increment even though they are sitting t top and the hold the most responsible post.
Similarly when a clerk even reaching last stage of his scale is found unfit for promotion to officer cadre it is the weakness and inefficiency of the management that they fail to train, irrigate and convert the inefficient senior clerk to efficient clerk suitably enough to be promoted as officer. It is enough to prove inefficacy of Human Resource Development Department and ineffectiveness of entire training system.
After all what else they give to experienced officers other than stagnation losses for none of their fault. I have no doubt in my conviction that it is not only management but also the union leaders who failed completely to erase the word stagnation from pay scale of bank employees.
There are numerous examples in banks that an officer promoted by the management to scale III but given the posting of branch Manager where a scale I or scale II officer is supposed to work and vice versa. It is enough to substantiate the fact that large scale whimsical promotions are taking place in banks forcing ban management to post unpromted officers to shoulder the responsibility of bigger branches and specially critical and sensitive branches. Such type of anomalies occurs happens only because unchallengeable power is given to interviewer to make or mar career of an officer in the promotion processes.
If anyone do not agree with my views expressed above I request them to please justify the continuance of stagnation in pay scale under changed scenario in the banking industry.
Sunday, November 29, 2009
Friday, November 20, 2009
Needless mergers of banks
Central Government has been building pressure on banks to make best efforts for merger and acquisition. But I am unable to understand the motive behind it in Indian perspective. Finance Minister has said that through consolidation, financial powers of banks will improve and they will not only be able to augment efficiency and help in GDP growth but also get success in competing with International big banks.
Here the million dollar question arises whether Late Indira Gandhi had nationalized banks to compete with International banks, whether banks are meant to extend credit in thousands of crores to a few hundred merchants or manufacturers only?
Have government forgotten the social objective of banks completely?
Is it possible for a government to survive by discarding the interest of common men, farmers, small traders in India?
Is it necessary for India to have bigger banks to extend credit to farmers and small traders who together constitutes 95% of population and without whose support even economic viability of large projects would be at stake?
It is important to mention here that there is sharp rise in loan portfolio or visible growth in advances of banks in general is not due to financing made by banks to small traders and farmers but only due to bulk financing made to big corporate houses, to real estate developers and to infra structure developers.
Does any one in the government or in RBI mean that by merger and enhancing powers of banks, there will be equitable GDP growth in country like India?
Even in America where big banks are many, one out of every seven Americans starves and struggle for earning their bread and butter for at least survival. In India the position is worse than that in USA. In India nine out of every ten Indians are unable to earn sufficient money even for respectful living. Considerable large proportion of Indian population is suffering from mal-nutrition; they die of curable diseases in want of proper medical assistance and they remain unemployed in want of adequate opportunities. This is India where even federal structure of the country is at stake due to largely growing unemployment and where person like Raj Thakre has been trying hard to disallow Non-marathi to seek employment in Maharashtra and Shiv Raj Chouhan CM says he would not employment to Biharis and North Indian in the state of MP. Besides in majority of villages, small towns and cities there is no proper sanitation facilities, acute scarcity of water and electricity, crisis for medical treatment and what not. This is why I reiterate that Indian environment is different from other developed nations and hence need unique treatment.
It is worthwhile to add here that USA government have realized after fall of big banks and financial Institution during last year that management of big banks is very difficult compared to smaller ones. Still there are about 8000 smaller banks functioning in USA to serve common men. It is also true that 125 banks became bankrupt or closed their shutters during the current year in USA.
If we talk of India we have less than 30 public sector banks and they are said to be in better health position. They are well scattered in every nook and corner of the country to serve Indians in general. They have to be encouraged to extend maximum help to small borrowers.They cannot extend any better help to poor person after merger of banks.Then what is the need of merger and acquisition? Why is government bent upon merger Need of the hour is to make them able to cater to the needs of common men.
Even if government feels the necessity of having large banks with huge capital to compete with foreign banks, they can choose to have one or two like SBI or PNB (after merger of SBI with associate banks I think capital size of SBI will be comparable with their foreign counterparts and similarly after merger of PNB with some suitable bank),At least other banks should be left untouched to serve common men and forget big projects, bulk financing, corporate borrowers completely and concentrate only on small and mid size borrowers i.e. credit upto ten lacs.
Even if we leave aside the social objective,it is not commercially proposition to build pressure (frequent request by FM or RBI is enough to build pressure) on banks to go for merger and acquisition especially when government have granted economic freedom to individual banks in the era of economic reformation , liberalization and globalization When need will arise banks will themselves strive hard to grow bigger to survive. As of now banks in India are said to be safer than foreign banks. Even government has admitted it repeatedly.
Inspite of all ,if government still consider it better to go for merger , I would like to suggest our Finance Minister to merge all PSBs including SBI and make them one entity like Income Tax department and other departments of Government of India so that there be no unwarranted interest rate war, no case of multiple financing, no case of take over at the cost of bank’s interest and no unhealthy competition as prevalent in banking industry. There will be unified effort to recover the money from recalcitrant borrowers. Banks will be able to check money laundering in a better way .People will not get opportunity to park their black money in different branches of different banks.
Need of the hour is to strengthen the existing structure of banks, make them more and more efficient and enthusiastic. Government should make efforts for repayment of loan and for this purpose make water tight laws to ensure cent percent recovery of loan from willful defaulters so that proportion of dead money in bank’s balance sheet comes down and they can afford and generate will to make finance to common men. Present scenario is that branch manager of every bank’s branch is afraid of extending credit to small borrowers in fear of account going bad and lastly added to Non Performing Asset. Need of the hour is to avoid political intervention in banking affairs and to resort to healthy norms for financing without any fear of target achievement. To add fuel to fire every banks are suffering from staff shortage and as a consequence there is no monitoring on existing borrowal accounts and gradually service quality in banks at many branches is deteriorating in want of adequate staff. Banks are even unable to redeploy the existing surplus staff at Metro branches due to protest from powerful employees union.
Last but not the least; bitter truth is that big business houses are getting all sorts of help from the government, from the banks and from all corners but all at the cost of poor and middle family. Rich business houses are producing, hoarding and realizing maximum profit on their products and it will not exaggeration to say that the present trend of rising price is caused by these profit makers only. Government has been making promises and promises to control price, but always fail on this front because they have given undue freedom and undue privileges to these business houses. I hope government will make all best efforts to give relief to general mass who are subjected to unbearable pain on account of sharp price rise in all commodities without proportionate rise in their monthly income.
India is said to be suffering from naxalism due to increasing poverty and due to the fact that they are denied their legitimate right and they are even deprived of justice in proper time. Can merger and acquisition by banks help in ameliorating their problems of poverty ridden Indians? I would like to draw the attention of learned FM and PM that late Indira Gandhi (Congress Party) had nationalized banks because private banks were hesitant to extend credit to common men, villagers were deprived of banking facilities and common men was afraid of even entering in to bank. Private Banks were exploiting not only staff working in the banks but were also exploiting business houses. It will not be exaggeration to predict and say that the same Congress Party under the banner of UPA is dragging banking industry in pre-nationalization era.
Please keep in mind that during reformation era 23 banks were forcefully merged to bigger banks by government of India because they succummed to malady and irregularity they accumulated , and not because they were small banks.Giant banks ,Lehman Brothers,AIG failed not because they were big but they followed wrong policies and commited misadventure in delivery of credit and in making investments.
In India I doubt the honesty and integrity of government in their efforts for merger,acquisition and consolidation of banks because they know the quantum of malady and bad assets hidden behind the rosy balance sheets of PSBs.Otherwise there is no reason for providing capital infusion to various weak banks from time to time. It is their political agenda to save the banks from exposure of their reality when the misdeeds increases to such a large extent that it punctures the tyre of running banks.They are trying to divert the attention of public from inherent weaknesses of PSBs and this is why they are not agreeable to respectable wage revision of bank employees even after two year long dialogue with union leaders. Exodus of talented employees and non entry of well qualified person in PSB banks is also a vital reason behind growing weakness of Banks. On the contrary private banks like ICICI and HDFC banks have grown to such a large extent in last 15 years of their existance that even 100 year old PSBs are facing challenge for survival.
Danendra Jain
21st November 2009
Here the million dollar question arises whether Late Indira Gandhi had nationalized banks to compete with International banks, whether banks are meant to extend credit in thousands of crores to a few hundred merchants or manufacturers only?
Have government forgotten the social objective of banks completely?
Is it possible for a government to survive by discarding the interest of common men, farmers, small traders in India?
Is it necessary for India to have bigger banks to extend credit to farmers and small traders who together constitutes 95% of population and without whose support even economic viability of large projects would be at stake?
It is important to mention here that there is sharp rise in loan portfolio or visible growth in advances of banks in general is not due to financing made by banks to small traders and farmers but only due to bulk financing made to big corporate houses, to real estate developers and to infra structure developers.
Does any one in the government or in RBI mean that by merger and enhancing powers of banks, there will be equitable GDP growth in country like India?
Even in America where big banks are many, one out of every seven Americans starves and struggle for earning their bread and butter for at least survival. In India the position is worse than that in USA. In India nine out of every ten Indians are unable to earn sufficient money even for respectful living. Considerable large proportion of Indian population is suffering from mal-nutrition; they die of curable diseases in want of proper medical assistance and they remain unemployed in want of adequate opportunities. This is India where even federal structure of the country is at stake due to largely growing unemployment and where person like Raj Thakre has been trying hard to disallow Non-marathi to seek employment in Maharashtra and Shiv Raj Chouhan CM says he would not employment to Biharis and North Indian in the state of MP. Besides in majority of villages, small towns and cities there is no proper sanitation facilities, acute scarcity of water and electricity, crisis for medical treatment and what not. This is why I reiterate that Indian environment is different from other developed nations and hence need unique treatment.
It is worthwhile to add here that USA government have realized after fall of big banks and financial Institution during last year that management of big banks is very difficult compared to smaller ones. Still there are about 8000 smaller banks functioning in USA to serve common men. It is also true that 125 banks became bankrupt or closed their shutters during the current year in USA.
If we talk of India we have less than 30 public sector banks and they are said to be in better health position. They are well scattered in every nook and corner of the country to serve Indians in general. They have to be encouraged to extend maximum help to small borrowers.They cannot extend any better help to poor person after merger of banks.Then what is the need of merger and acquisition? Why is government bent upon merger Need of the hour is to make them able to cater to the needs of common men.
Even if government feels the necessity of having large banks with huge capital to compete with foreign banks, they can choose to have one or two like SBI or PNB (after merger of SBI with associate banks I think capital size of SBI will be comparable with their foreign counterparts and similarly after merger of PNB with some suitable bank),At least other banks should be left untouched to serve common men and forget big projects, bulk financing, corporate borrowers completely and concentrate only on small and mid size borrowers i.e. credit upto ten lacs.
Even if we leave aside the social objective,it is not commercially proposition to build pressure (frequent request by FM or RBI is enough to build pressure) on banks to go for merger and acquisition especially when government have granted economic freedom to individual banks in the era of economic reformation , liberalization and globalization When need will arise banks will themselves strive hard to grow bigger to survive. As of now banks in India are said to be safer than foreign banks. Even government has admitted it repeatedly.
Inspite of all ,if government still consider it better to go for merger , I would like to suggest our Finance Minister to merge all PSBs including SBI and make them one entity like Income Tax department and other departments of Government of India so that there be no unwarranted interest rate war, no case of multiple financing, no case of take over at the cost of bank’s interest and no unhealthy competition as prevalent in banking industry. There will be unified effort to recover the money from recalcitrant borrowers. Banks will be able to check money laundering in a better way .People will not get opportunity to park their black money in different branches of different banks.
Need of the hour is to strengthen the existing structure of banks, make them more and more efficient and enthusiastic. Government should make efforts for repayment of loan and for this purpose make water tight laws to ensure cent percent recovery of loan from willful defaulters so that proportion of dead money in bank’s balance sheet comes down and they can afford and generate will to make finance to common men. Present scenario is that branch manager of every bank’s branch is afraid of extending credit to small borrowers in fear of account going bad and lastly added to Non Performing Asset. Need of the hour is to avoid political intervention in banking affairs and to resort to healthy norms for financing without any fear of target achievement. To add fuel to fire every banks are suffering from staff shortage and as a consequence there is no monitoring on existing borrowal accounts and gradually service quality in banks at many branches is deteriorating in want of adequate staff. Banks are even unable to redeploy the existing surplus staff at Metro branches due to protest from powerful employees union.
Last but not the least; bitter truth is that big business houses are getting all sorts of help from the government, from the banks and from all corners but all at the cost of poor and middle family. Rich business houses are producing, hoarding and realizing maximum profit on their products and it will not exaggeration to say that the present trend of rising price is caused by these profit makers only. Government has been making promises and promises to control price, but always fail on this front because they have given undue freedom and undue privileges to these business houses. I hope government will make all best efforts to give relief to general mass who are subjected to unbearable pain on account of sharp price rise in all commodities without proportionate rise in their monthly income.
India is said to be suffering from naxalism due to increasing poverty and due to the fact that they are denied their legitimate right and they are even deprived of justice in proper time. Can merger and acquisition by banks help in ameliorating their problems of poverty ridden Indians? I would like to draw the attention of learned FM and PM that late Indira Gandhi (Congress Party) had nationalized banks because private banks were hesitant to extend credit to common men, villagers were deprived of banking facilities and common men was afraid of even entering in to bank. Private Banks were exploiting not only staff working in the banks but were also exploiting business houses. It will not be exaggeration to predict and say that the same Congress Party under the banner of UPA is dragging banking industry in pre-nationalization era.
Please keep in mind that during reformation era 23 banks were forcefully merged to bigger banks by government of India because they succummed to malady and irregularity they accumulated , and not because they were small banks.Giant banks ,Lehman Brothers,AIG failed not because they were big but they followed wrong policies and commited misadventure in delivery of credit and in making investments.
In India I doubt the honesty and integrity of government in their efforts for merger,acquisition and consolidation of banks because they know the quantum of malady and bad assets hidden behind the rosy balance sheets of PSBs.Otherwise there is no reason for providing capital infusion to various weak banks from time to time. It is their political agenda to save the banks from exposure of their reality when the misdeeds increases to such a large extent that it punctures the tyre of running banks.They are trying to divert the attention of public from inherent weaknesses of PSBs and this is why they are not agreeable to respectable wage revision of bank employees even after two year long dialogue with union leaders. Exodus of talented employees and non entry of well qualified person in PSB banks is also a vital reason behind growing weakness of Banks. On the contrary private banks like ICICI and HDFC banks have grown to such a large extent in last 15 years of their existance that even 100 year old PSBs are facing challenge for survival.
Danendra Jain
21st November 2009
Tuesday, September 22, 2009
Confused policy on interest rates
The Reserve Bank of India (RBI) is preparing to ban lending below the prime lending rate (PLR), the benchmark for all floating-rate.
Lending for export, home ,agriculture,vehicle,education are not related to PLR and credit facilities under these sector are extended by all banks at sub PLR rates in unison with government policies announced in this regard from time to time. It is astonishing that Government is now advocating complete stop on sub PLR loans. Till today banks were forced to extend credit facility to farmers, students, and exporters and to compensate bankers government used to give interest subsidy to banks. Now RBI desires to ban sub PLR lending and stop subsidy too . It means the entire loan will come on the shoulder of common men and there will be undoubtedly no change in profitability of rich and affluent class.
When government has given freedom to banks to decide its rate structure, it has got no right to ask or advice or change in rate structure. It is rather fun that inspite of risk reward ratio being adverse for most of the bankers, CMDs of most of PSU banks prefer loss to displeasure of FM and Government of India and this is why they have not only given respect to advices of the government but also taken its own initiative to extend more and more sub PLR loans to corporate sector.
It is also true that due to sharp reduction in CRR,SLR and repo rates banks are flush with enhanced liquidity and hence they are in such an awkward position that they also find it comfortable and profitable to extend credit to valuable and reliable corporate at Sub PLR rates than to make finance to small and mid-size borrowers with lesser reliability and poorer creditworthiness .It is to be kept in mind that even if banks do not like sub PLR financing they will have to opt for parking their surplus fund at RBI at rate as low as 3.5%.
Since total credit under sub PLR rates has been mounting gradually it will be very difficult now for bankers to prohibit sub PLR loans completely in short period.
Not only this, if bankers decide to stop the same immediately I think they will be left with no alternative else than stopping accepting fresh deposits from public till they are able to use profitably the exiting surplus fund.
To add fuel to fire, government will be forced to change its policy on agricultural and export loans which forces banks to lend under this sector at sub PLR rates. Banks will have to stop sub PLR lending under retail segment and there is no doubt that it will have repercussion on the entire demand value in auto sector and related ancillary sector. Obviously steps taken at this stage by the government are not only against its own policy but also suicidal attempt at a critical juncture when the entire economy is victim of global slowdown.
Too much hype had been created by government to reduce interest rates and banks were under continuous pressure from RBI to bring down interest rates to create demand and now the perfectly opposite step suggested by the same government to stop sub PLR lending is confusing also.
It is therefore desirable that government decides structure of the rate of interest on deposit and advances and it should be made uniformly applicable in all private and public sector banks. And this will be better than confusing statements issued from RBI on rate structure from time to time . Freedom given to banks on interest rate structure is unwarranted and should be taken back. Quality of service and other non interest income will be the area where banks will compete among them.There is no doubt thatinterest rates were better regulated before 1991 and in all parameters banks were performing better then compared to inflated profits shown by them under the current regime of freedom.
Lending for export, home ,agriculture,vehicle,education are not related to PLR and credit facilities under these sector are extended by all banks at sub PLR rates in unison with government policies announced in this regard from time to time. It is astonishing that Government is now advocating complete stop on sub PLR loans. Till today banks were forced to extend credit facility to farmers, students, and exporters and to compensate bankers government used to give interest subsidy to banks. Now RBI desires to ban sub PLR lending and stop subsidy too . It means the entire loan will come on the shoulder of common men and there will be undoubtedly no change in profitability of rich and affluent class.
When government has given freedom to banks to decide its rate structure, it has got no right to ask or advice or change in rate structure. It is rather fun that inspite of risk reward ratio being adverse for most of the bankers, CMDs of most of PSU banks prefer loss to displeasure of FM and Government of India and this is why they have not only given respect to advices of the government but also taken its own initiative to extend more and more sub PLR loans to corporate sector.
It is also true that due to sharp reduction in CRR,SLR and repo rates banks are flush with enhanced liquidity and hence they are in such an awkward position that they also find it comfortable and profitable to extend credit to valuable and reliable corporate at Sub PLR rates than to make finance to small and mid-size borrowers with lesser reliability and poorer creditworthiness .It is to be kept in mind that even if banks do not like sub PLR financing they will have to opt for parking their surplus fund at RBI at rate as low as 3.5%.
Since total credit under sub PLR rates has been mounting gradually it will be very difficult now for bankers to prohibit sub PLR loans completely in short period.
Not only this, if bankers decide to stop the same immediately I think they will be left with no alternative else than stopping accepting fresh deposits from public till they are able to use profitably the exiting surplus fund.
To add fuel to fire, government will be forced to change its policy on agricultural and export loans which forces banks to lend under this sector at sub PLR rates. Banks will have to stop sub PLR lending under retail segment and there is no doubt that it will have repercussion on the entire demand value in auto sector and related ancillary sector. Obviously steps taken at this stage by the government are not only against its own policy but also suicidal attempt at a critical juncture when the entire economy is victim of global slowdown.
Too much hype had been created by government to reduce interest rates and banks were under continuous pressure from RBI to bring down interest rates to create demand and now the perfectly opposite step suggested by the same government to stop sub PLR lending is confusing also.
It is therefore desirable that government decides structure of the rate of interest on deposit and advances and it should be made uniformly applicable in all private and public sector banks. And this will be better than confusing statements issued from RBI on rate structure from time to time . Freedom given to banks on interest rate structure is unwarranted and should be taken back. Quality of service and other non interest income will be the area where banks will compete among them.There is no doubt thatinterest rates were better regulated before 1991 and in all parameters banks were performing better then compared to inflated profits shown by them under the current regime of freedom.
Saturday, July 11, 2009
CMD Of Public Sector Banks AND Credit Growth
Latest statistics on lending done by the banks in the first quarter released by RBI reveal that credit delivery in the first quarter was hardly 5% of quantum of credit made by the banks in the same quarter last year. Though banks have shown credit delivery of Rs.8000 crores in the last fortnight of June quarter , resultant increase in quarter to quarter in outstanding credit was hardly 3000 crores of rupees compared to more than Rs.50000 crores increase in June last year. This show how much slow are banks in credit delivery in the current financial year and undoubtedly it is a matter of concern for the economy and the country as a whole.
Most of the top rated banks are enhancing their lending by financing to big corporate houses. Most of the new borrowers added during recession period are belonging to owner groups of medium and large industries and trade houses, and that too in amounts in hundreds of crores per borrower. If number of accounts and amount involved in fresh credit disbursements is furnished by all banks month wise for last 12 months, it will become crystal clear how much loan amount has been disbursed during last one year to big corporate houses and to how many common people. It will also be proved that banks are indulged in simple window dressing or manipulating of figures to show improvement in lending.
It is true that there is some fall in credit demand in the market due to global recession. But it cannot be believed that entire economy and entire turnover in trade have come to standstill. It is bitter truth that major chunk of turnover is confined in the ands of a very few business houses and it is they who create crisis in the market. It is sad and condemnable that even our government is also worried about the crocodile pain of big business houses, and not about the real pain the common men have been suffering. Entire stimulus package being provided are directed to provide benefit and relief to only rich people. Similarly banks are also providing bulk credit to big business house so that chances of account becoming bad remain lesser. Only those who want to avail loan for consumption, home or education or vehicle for personal use are approaching banks for lending. Government of India has been putting pressure on banks to reduce lending rates. But in the present recessionary market it is not possible to increase genuine lending even if the rate of interest is zero.
Yes it is worthwhile to mention here that those who are bad borrowers, who will invariably default in repayment of loan are able to manage the branch manager of a PSU bank and avail loan for any false or right purpose by extending some gifts to Branch Manager in cash or in kind. Such bad advances will ultimately contribute in increase in Non Performing Assets , NPA of the bank as have been happening for last so many years under targeted lending programmes of Government.
Besides honest and true branch manager of a bank is very much afraid of making new finance because probability of account turning bad seems more than the account proving to be healthy asset for the bank. The main reason behind such thinking is that there is practically no full proof method or legal effective steps or any intimidating weapon in the almirah of the bank to recover the loan from defaulting borrowers.
Banks have in fact to depend on the mercy of the borrower so far as repayment of the loan is concerned. Government has failed completely in ensuring the effectiveness of its legal recourse of action.
To add fuel to fire our politicians have polluted the repayment culture by announcing one after other waiver of loans and putting pressure on banks for entering into compromise settlements with will full defaulters as if government advises the banks to surrender fully before the borrowers. There is no fear in the mind of borrowers and they repay the loan as per their whims and fancies. Banks have got no control mechanism, other than persuasions and bagging in front of bad borrowers. This is why there has been poor growth in lending in banks whereas on the contrary there has been quantum jump in NPA of the bank
And it is only due to bulk lending to big corporate house, banks are able to reduce the NPA percentage wise compared to gross advances which helps the bank to project rosy picture and attractive balance sheet.
But the million dollar question is how long such window dressing, concealment of bad assets or restructuring of bad loans will help bank in survival. Lastly banks have to fail as their counterparts are failing in USA and other countries.
Obviously government has to provide effective tools to banks so that they can recover the bad loans and make fresh finance without any fear of action from their controlling bosses. Government has to understand that any lending by banks has to be repaid by borrower and those who fail to do so should be treated as criminal and treated according in quickest time. When borrowers are serious in making repayment of loan they avail from banks, bank will surely become liberal in lending and there will be definite and solid growth in bank’s lending
In conclusion we can say that to improve lending by banks , government has to stop political intervention, treat bank advance as advance , not as charity or subsidy and ensure quickest method of recovery of loan from willful defaulting borrower . This will create fearlessness in bankers and seriousness among loan seekers. In the long run, positive culture will penetrate in the minds of both bankers and borrowers and there will be real and consistent growth in lending. Not only big corporate houses but small traders and farmers will be able to get immediate loan facility from bank.
Last but not the least government has to develop quickly the Permanent Identification Number of any citizen so that multiple financing to the same borrower may be stopped at the earliest. There should be complete ban on opening of multiple accounts and any individual or any firm can open account in only one branch and in only one bank. This will helpful in stopping unhealthy lending and compel bad borrowers to repay the dues of a particular bank first and then only he can imagine of opening an account at other bank or seek loan facility. As of now, banks are so much ill equipped to stop multiple financing that bad borrowers take advantage of it and they get success in taking advances at various banks against the same asset and for the same purpose which is very much harmful for the bank and the greatest impediment in real growth of lending.
12th July 2009
Most of the top rated banks are enhancing their lending by financing to big corporate houses. Most of the new borrowers added during recession period are belonging to owner groups of medium and large industries and trade houses, and that too in amounts in hundreds of crores per borrower. If number of accounts and amount involved in fresh credit disbursements is furnished by all banks month wise for last 12 months, it will become crystal clear how much loan amount has been disbursed during last one year to big corporate houses and to how many common people. It will also be proved that banks are indulged in simple window dressing or manipulating of figures to show improvement in lending.
It is true that there is some fall in credit demand in the market due to global recession. But it cannot be believed that entire economy and entire turnover in trade have come to standstill. It is bitter truth that major chunk of turnover is confined in the ands of a very few business houses and it is they who create crisis in the market. It is sad and condemnable that even our government is also worried about the crocodile pain of big business houses, and not about the real pain the common men have been suffering. Entire stimulus package being provided are directed to provide benefit and relief to only rich people. Similarly banks are also providing bulk credit to big business house so that chances of account becoming bad remain lesser. Only those who want to avail loan for consumption, home or education or vehicle for personal use are approaching banks for lending. Government of India has been putting pressure on banks to reduce lending rates. But in the present recessionary market it is not possible to increase genuine lending even if the rate of interest is zero.
Yes it is worthwhile to mention here that those who are bad borrowers, who will invariably default in repayment of loan are able to manage the branch manager of a PSU bank and avail loan for any false or right purpose by extending some gifts to Branch Manager in cash or in kind. Such bad advances will ultimately contribute in increase in Non Performing Assets , NPA of the bank as have been happening for last so many years under targeted lending programmes of Government.
Besides honest and true branch manager of a bank is very much afraid of making new finance because probability of account turning bad seems more than the account proving to be healthy asset for the bank. The main reason behind such thinking is that there is practically no full proof method or legal effective steps or any intimidating weapon in the almirah of the bank to recover the loan from defaulting borrowers.
Banks have in fact to depend on the mercy of the borrower so far as repayment of the loan is concerned. Government has failed completely in ensuring the effectiveness of its legal recourse of action.
To add fuel to fire our politicians have polluted the repayment culture by announcing one after other waiver of loans and putting pressure on banks for entering into compromise settlements with will full defaulters as if government advises the banks to surrender fully before the borrowers. There is no fear in the mind of borrowers and they repay the loan as per their whims and fancies. Banks have got no control mechanism, other than persuasions and bagging in front of bad borrowers. This is why there has been poor growth in lending in banks whereas on the contrary there has been quantum jump in NPA of the bank
And it is only due to bulk lending to big corporate house, banks are able to reduce the NPA percentage wise compared to gross advances which helps the bank to project rosy picture and attractive balance sheet.
But the million dollar question is how long such window dressing, concealment of bad assets or restructuring of bad loans will help bank in survival. Lastly banks have to fail as their counterparts are failing in USA and other countries.
Obviously government has to provide effective tools to banks so that they can recover the bad loans and make fresh finance without any fear of action from their controlling bosses. Government has to understand that any lending by banks has to be repaid by borrower and those who fail to do so should be treated as criminal and treated according in quickest time. When borrowers are serious in making repayment of loan they avail from banks, bank will surely become liberal in lending and there will be definite and solid growth in bank’s lending
In conclusion we can say that to improve lending by banks , government has to stop political intervention, treat bank advance as advance , not as charity or subsidy and ensure quickest method of recovery of loan from willful defaulting borrower . This will create fearlessness in bankers and seriousness among loan seekers. In the long run, positive culture will penetrate in the minds of both bankers and borrowers and there will be real and consistent growth in lending. Not only big corporate houses but small traders and farmers will be able to get immediate loan facility from bank.
Last but not the least government has to develop quickly the Permanent Identification Number of any citizen so that multiple financing to the same borrower may be stopped at the earliest. There should be complete ban on opening of multiple accounts and any individual or any firm can open account in only one branch and in only one bank. This will helpful in stopping unhealthy lending and compel bad borrowers to repay the dues of a particular bank first and then only he can imagine of opening an account at other bank or seek loan facility. As of now, banks are so much ill equipped to stop multiple financing that bad borrowers take advantage of it and they get success in taking advances at various banks against the same asset and for the same purpose which is very much harmful for the bank and the greatest impediment in real growth of lending.
12th July 2009
Friday, July 10, 2009
Why poor credit growth in banks
Most of the top rated banks are enhancing their lending by financing to big corporate houses. Most of the new borrowers added during recession period are belonging to owner groups of medium and large industries and trade houses, and that too in amounts in hundreds of crores per borrower. If number of accounts and amount involved in fresh credit disbursements is asked by all banks month wise for last 12 months, it will become crystal clear how much loan amount has been disbursed during last one year and to how many people. It will also be proved that banks are indulged in simple window dressing or manipulating of figures to show improvement in lending.
As a matter of fact there is steep fall in credit demand in the market. Only those who want to avail loan for consumption, home or education or vehicle for personal use are approaching banks for lending. Government of India has been putting pressure on banks to reduce lending rates. But in the present recessionary market it is not possible to increase genuine lending even if the rate of interest is zero.
Yes those who are bad borrowers, who will invariably default in repayment of loan will manage the branch manager of a PSU bank and avail loan for any false or right purpose by extending some gifts to Branch Manager in cash or in kind. Such bad advances will ultimately contribute in increase in Non Performing Assets , NPA of the bank as have been happening for last so many years under targeted lending programmes of Government.
Besides honest and true branch manager of a bank is very much afraid of making new finance because probability of account turning bad seems more than the account proving to be healthy asset for the bank. The main reason behind such thinking is that there is practically no full proof method or legal effective steps or any intimidating weapon in the almirah of the bank to recover the loan from defaulting borrowers.
Banks have in fact to depend on the mercy of the borrower so far as repayment of the loan is concerned. Government has failed completely in ensuring the effectiveness of its legal recourse of action.
To add fuel to fire our politicians have polluted the repayment culture by announcing one after other waiver of loans and putting pressure on banks for entering into compromise settlements with will full defaulters as if government advises the banks to surrender fully before the borrowers. There is no fear in the mind of borrowers and they repay the loan as per their whims and fancies. Banks have got no control mechanism, other than persuasions and bagging in front of bad borrowers. This is why there has been poor growth in lending in banks whereas on the contrary there has been quantum jump in NPA of the bank
And it is only due to bulk lending to big corporate house, banks are able to reduce the NPA percentage wise compared to gross advances which helps the bank to project rosy picture and attractive balance sheet.
But the million dollar question is how long such window dressing, concealment of bad assets or restructuring of bad loans will help bank in survival. Lastly banks have to fail as their counterparts are failing in USA and other countries.
Obviously government has to provide effective tools to banks so that they can recover the bad loans and make fresh finance without any fear of action from their controlling bosses. Government has to understand that any lending by banks has to be repaid by borrower and those who fail to do so should be treated as criminal and treated according in quickest time. When borrowers are serious in making repayment of loan they avail from banks , bank will surely become liberal in lending and there will be definite and solid growth in bank’s lending
Danendra jain
11th July 2009
As a matter of fact there is steep fall in credit demand in the market. Only those who want to avail loan for consumption, home or education or vehicle for personal use are approaching banks for lending. Government of India has been putting pressure on banks to reduce lending rates. But in the present recessionary market it is not possible to increase genuine lending even if the rate of interest is zero.
Yes those who are bad borrowers, who will invariably default in repayment of loan will manage the branch manager of a PSU bank and avail loan for any false or right purpose by extending some gifts to Branch Manager in cash or in kind. Such bad advances will ultimately contribute in increase in Non Performing Assets , NPA of the bank as have been happening for last so many years under targeted lending programmes of Government.
Besides honest and true branch manager of a bank is very much afraid of making new finance because probability of account turning bad seems more than the account proving to be healthy asset for the bank. The main reason behind such thinking is that there is practically no full proof method or legal effective steps or any intimidating weapon in the almirah of the bank to recover the loan from defaulting borrowers.
Banks have in fact to depend on the mercy of the borrower so far as repayment of the loan is concerned. Government has failed completely in ensuring the effectiveness of its legal recourse of action.
To add fuel to fire our politicians have polluted the repayment culture by announcing one after other waiver of loans and putting pressure on banks for entering into compromise settlements with will full defaulters as if government advises the banks to surrender fully before the borrowers. There is no fear in the mind of borrowers and they repay the loan as per their whims and fancies. Banks have got no control mechanism, other than persuasions and bagging in front of bad borrowers. This is why there has been poor growth in lending in banks whereas on the contrary there has been quantum jump in NPA of the bank
And it is only due to bulk lending to big corporate house, banks are able to reduce the NPA percentage wise compared to gross advances which helps the bank to project rosy picture and attractive balance sheet.
But the million dollar question is how long such window dressing, concealment of bad assets or restructuring of bad loans will help bank in survival. Lastly banks have to fail as their counterparts are failing in USA and other countries.
Obviously government has to provide effective tools to banks so that they can recover the bad loans and make fresh finance without any fear of action from their controlling bosses. Government has to understand that any lending by banks has to be repaid by borrower and those who fail to do so should be treated as criminal and treated according in quickest time. When borrowers are serious in making repayment of loan they avail from banks , bank will surely become liberal in lending and there will be definite and solid growth in bank’s lending
Danendra jain
11th July 2009
Friday, July 03, 2009
Finance Minister has to reply
Rebate in Income Tax on Home Loan Interest, Home loan Instalment, Reduced rate of lending for Home loan upto 30 lacs
Why all benefits to those home seekers who are rich and who can afford repayment of loan worth Rs.30.00 lacs and also margin of 20% needed for loan. Naturally such person must have annual income of at least more than five to 8.00 lac to become eligible for finance of Rs.20.00 lac to Rs.30.000 lacs.
Why all types of rebates for such rich class people whereas poor who cannot afford repayment of loan of even Rs.2.00 lac are fully neglected. Obviously rebates are being allowed to win the hearts of real estate developers and home builders.
Why not government comes out with affordable housing project for poor and middle class person whose annual income is less than Rs.2.00 lacs. Government has large chunk of land under its control and by the disinvestment proceeds they can acquire land for building small houses at cheaper rates.
Similarly there is pressure for reduction in lending rate of interest and why not stress for recovery of bad loans which is rising in momentum every year and which has become a cancer for banking industry. Waiver of loan or compromise settlement with poor and middle class farmer is understandable. But why banks are forced to compromise with willful defaulting industrialists and traders.
Until there is culture of recovery supported by government of India, any bank cannot imagine of healthy lending. Bank is therefore forced to opt for parking surplus fund with RBI at 3.5%. After all if a bank goes bankrupt it is the government, which has to infuse capital for its survival. How many times will government provide ventilator to sick bank? Why not defaulters are treated as criminals excluding the case of natural calamity?
What is control of disproportionate increase in assets of top bank executives of various banks?
Has government any plan to verify the credentials and assets of GM of any bank before promoting him to ED or CMD?
There is provision for rural posting for all officers to be promoted to higher scale. Have you ever verified whether banks are using this rural provision for punishing those officers who do not flatter to their bosses?
Are all GM or DGM or AGM having rural exposure before his or her promotion?
Are banks giving promotion to honest officers or sidelining them as happens in other government departments?
What is the need of Interview marks in Promotion marks when bank has tested and attested the services of any officer for more than a decade or two or three. Don’t you agree that interview marks gives scope for manipulation and injudicious promotion to corrupt officers, which give rise to flattery culture?
Is there any remedy for officers who are unjustifiably rejected in promotion process?
Are banks showing real status of bad loans in their balance sheet?
Hiding of NPA or recovery of NPA-- which is getting importance in PSBs
Net NPA ratio of bank is being projected as less than 1% . Gross NPA ratio is little more. But the question is whether Gross amount of NPA has been increasing every year and whether the same is within control of individual banks, and whether they are capable to monitor bad assets and adequately capacitated to recover the bad loan from bad borrowers. Banks have been showing lesser NPA ratio by increasing total advances of the bank and not by positive recovery from existing bad loan accounts.
Are you happy with attractive balance sheets of the bank or you also doubt their correctness as happened in case of Satyam Computers which was awarded twice for best Corporate Governance and which company was rated high by best Credit Rating Agencies of the country.
Do you really believe that private banks are not better than PSBs so far as standard of customer service, sincerity of officer working in banks and health of banking assets are concerned? It is possible that CMD of Private banks do not oblige FM or Government of India or RBI governor by reducing lending rates whereas CMD of PSB compete among each other to become front runner in the good book of FM. I remember CMD of Indian bank was considered as the best for more than a decade and government came to senses only when fraud of amount of Rs.1200/ crore was detected.
It is desirable to find out as follows:
Total advances as on 31.03.2006 with number of borrower accounts
( it is assumed that finance made during last three years are standard )
Out of which total amount of NPA in how many accounts
Finance made in the year
Total Ac and Total amount
Out of which NPA a/c & Amt.
2001
2002
2003
2004
2005
2006
Out of which written off / sacrificed during the year 2006 –07 , 07-08 and 08-09.
Name off officers who sanctioned the loan in the beginning and who subsequently monitored and renewed the same. Then find out the list of those officers whose name appear in more than 100 or 50 or 10 (Benchmark fixed by government) bad accounts.
Whether the NPA account has been restructured and if yes why?
Why all benefits to those home seekers who are rich and who can afford repayment of loan worth Rs.30.00 lacs and also margin of 20% needed for loan. Naturally such person must have annual income of at least more than five to 8.00 lac to become eligible for finance of Rs.20.00 lac to Rs.30.000 lacs.
Why all types of rebates for such rich class people whereas poor who cannot afford repayment of loan of even Rs.2.00 lac are fully neglected. Obviously rebates are being allowed to win the hearts of real estate developers and home builders.
Why not government comes out with affordable housing project for poor and middle class person whose annual income is less than Rs.2.00 lacs. Government has large chunk of land under its control and by the disinvestment proceeds they can acquire land for building small houses at cheaper rates.
Similarly there is pressure for reduction in lending rate of interest and why not stress for recovery of bad loans which is rising in momentum every year and which has become a cancer for banking industry. Waiver of loan or compromise settlement with poor and middle class farmer is understandable. But why banks are forced to compromise with willful defaulting industrialists and traders.
Until there is culture of recovery supported by government of India, any bank cannot imagine of healthy lending. Bank is therefore forced to opt for parking surplus fund with RBI at 3.5%. After all if a bank goes bankrupt it is the government, which has to infuse capital for its survival. How many times will government provide ventilator to sick bank? Why not defaulters are treated as criminals excluding the case of natural calamity?
What is control of disproportionate increase in assets of top bank executives of various banks?
Has government any plan to verify the credentials and assets of GM of any bank before promoting him to ED or CMD?
There is provision for rural posting for all officers to be promoted to higher scale. Have you ever verified whether banks are using this rural provision for punishing those officers who do not flatter to their bosses?
Are all GM or DGM or AGM having rural exposure before his or her promotion?
Are banks giving promotion to honest officers or sidelining them as happens in other government departments?
What is the need of Interview marks in Promotion marks when bank has tested and attested the services of any officer for more than a decade or two or three. Don’t you agree that interview marks gives scope for manipulation and injudicious promotion to corrupt officers, which give rise to flattery culture?
Is there any remedy for officers who are unjustifiably rejected in promotion process?
Are banks showing real status of bad loans in their balance sheet?
Hiding of NPA or recovery of NPA-- which is getting importance in PSBs
Net NPA ratio of bank is being projected as less than 1% . Gross NPA ratio is little more. But the question is whether Gross amount of NPA has been increasing every year and whether the same is within control of individual banks, and whether they are capable to monitor bad assets and adequately capacitated to recover the bad loan from bad borrowers. Banks have been showing lesser NPA ratio by increasing total advances of the bank and not by positive recovery from existing bad loan accounts.
Are you happy with attractive balance sheets of the bank or you also doubt their correctness as happened in case of Satyam Computers which was awarded twice for best Corporate Governance and which company was rated high by best Credit Rating Agencies of the country.
Do you really believe that private banks are not better than PSBs so far as standard of customer service, sincerity of officer working in banks and health of banking assets are concerned? It is possible that CMD of Private banks do not oblige FM or Government of India or RBI governor by reducing lending rates whereas CMD of PSB compete among each other to become front runner in the good book of FM. I remember CMD of Indian bank was considered as the best for more than a decade and government came to senses only when fraud of amount of Rs.1200/ crore was detected.
It is desirable to find out as follows:
Total advances as on 31.03.2006 with number of borrower accounts
( it is assumed that finance made during last three years are standard )
Out of which total amount of NPA in how many accounts
Finance made in the year
Total Ac and Total amount
Out of which NPA a/c & Amt.
2001
2002
2003
2004
2005
2006
Out of which written off / sacrificed during the year 2006 –07 , 07-08 and 08-09.
Name off officers who sanctioned the loan in the beginning and who subsequently monitored and renewed the same. Then find out the list of those officers whose name appear in more than 100 or 50 or 10 (Benchmark fixed by government) bad accounts.
Whether the NPA account has been restructured and if yes why?
Sunday, June 28, 2009
Private banks have threatened to stop Auto Loan
Private Banks have rightly told that they will stop financing loan for private and commercial vehicles if RBI fails to issue clear guidelines enabling banks to take repossession of vehicles where borrowers default in repayment.
Private Banks are worried about their capital, profitability of their bank and their ultimate survival and this is why thought it fit to stop lending for vehicles than to bear the risk of assets going bad and weeping for having no weapon in the hands of banks to recover the money from recalcitrant and willful defaulters. On the other hand Public Sector Banks (PSB) are least bothered of loss of asset, profitability of banks, growing level of bad assets, and growing number of willful defaulters in want of proper and effective legal safeguards and overall ill health of the bank and hence they continue to indulge in auto lending despite increasing number of defaults. To add fuel to fire SBI has no reduced lending rate to 8% for one year for purchase of vehicle.
PSB can afford to be careless because they are public servants whereas officers in Private Banks perform as owner of the bank. PSBs know very well that whenever any PSB become sick due to wrong policies or wrong implementation of policies or dirty politics, government does not hesitate to provide capital to such ailing banks. During last two decades of reformation government has infused thousands of crores of rupees in PSBs and at the same time forced PSBs to sacrifice or waive loan worth at least one lac crore of rupees.
It is wise and prudent for CMD of PSB to become yes-man and flatterer of FM than to worry about ill health of bank and invite sickness in his personal life. This is why they bother only what Finance Minister tells or advises to banks during meetings.. CMD's of PSB compete with each other in obeying the instruction of FM.
It is therefore wrong and foolish to say or conclude that since the financial health of PSB is better they have not stopped auto loans. As a matter of fact health of Private Banks is far better than that of PSB and this is why they have grown so rapidly that their business has surpassed that of many PSBs which are more than 50 years old banks. Even public image of private banks is better and this is why share prices of private banks is valued higher. PE ratio (which is considered as indicator of market evaluation of any company) of PSB is less than four whereas that of private banks is more than 10.
Another indicator of ill health is said to be NPA ratio. If Net NPA ratio is less than one, the bank is considered as healthy. Now-a -days all banks are showing net NPA less than one, as if all Indian borrowers are sincere and honest in repayment of loan they take. Here also private banks show the real NPA whereas PSBs know the art of hiding real NPA and hence they also reflect net NPA ratio as less than one. It is ICICI bank which dared to admit that there was 25% rise in NPA in auto loan last year and they have taken corrective steps to safeguard their capital. On the contrary PSB conceal bad accounts and need not bother for recovery or taking corrective steps. For them it is easier to restructure the loan and postpone the corrective steps for future generation.
It is difficult to distinguish between bad and good bank where figures in balance sheets are cooked, concocted, fabricated and manipulated as per whims of CMD of PSBs. As long as team of Chartered Accountants work in the same fashion as they did in Satyam Computers, one cannot assess the factual position from Balance Sheet of any bank particularly that of PSBs. It can be said with firmness now that Balance Sheet is no more a mirror of business of any company.
As a matter of fact Private Banks have realized during decade old experience that case of default has been increasing sharply due to some restriction imposed by RBI and Government of India on seizure of vehicles from defaulters in concurrence with a few judgments pronounced by Apex Court in this regard. Borrowers as a result are not afraid of any punitive action even if they willfully stop repayment of loan they take from banks. So far as PSBs are concerned , borrowers of all kind ( auto loanee or house loanee or business loanee ) are very much sure that they banks officers can be manage by gifts and cash incentives even if they do not repay the loan in time and ultimately they can manage waiver or loan or compromise settlement.
To conclude it can be said that CMD of {Private Banks has to worry about actual health of their own bank whereas CMD of PSB has to keep FM and RBI Governor happy so that their own future may be brighter. Real exposure will take place only if asset classifications of top three banks are thoroughly checked.
And so far as lending to any sector is concerned, it cannot grow until government is serious and sincere for recovery of loan from those who fail to repay their dues as per contractual terms to bank.
No politics and no sympathy is needed for person who defaults in keeping commitment until there is natural calamity or until the situation goes beyond the control of the borrower. Non repayment of loan is a crime and the criminal must be punished in all sphere of life to maintain social discipline. Obviously demand of private banks for clear guideline for repossession of vehicles from defaulting borrowers is completely justified.
Danendra Jain
28th June 2009
Private Banks are worried about their capital, profitability of their bank and their ultimate survival and this is why thought it fit to stop lending for vehicles than to bear the risk of assets going bad and weeping for having no weapon in the hands of banks to recover the money from recalcitrant and willful defaulters. On the other hand Public Sector Banks (PSB) are least bothered of loss of asset, profitability of banks, growing level of bad assets, and growing number of willful defaulters in want of proper and effective legal safeguards and overall ill health of the bank and hence they continue to indulge in auto lending despite increasing number of defaults. To add fuel to fire SBI has no reduced lending rate to 8% for one year for purchase of vehicle.
PSB can afford to be careless because they are public servants whereas officers in Private Banks perform as owner of the bank. PSBs know very well that whenever any PSB become sick due to wrong policies or wrong implementation of policies or dirty politics, government does not hesitate to provide capital to such ailing banks. During last two decades of reformation government has infused thousands of crores of rupees in PSBs and at the same time forced PSBs to sacrifice or waive loan worth at least one lac crore of rupees.
It is wise and prudent for CMD of PSB to become yes-man and flatterer of FM than to worry about ill health of bank and invite sickness in his personal life. This is why they bother only what Finance Minister tells or advises to banks during meetings.. CMD's of PSB compete with each other in obeying the instruction of FM.
It is therefore wrong and foolish to say or conclude that since the financial health of PSB is better they have not stopped auto loans. As a matter of fact health of Private Banks is far better than that of PSB and this is why they have grown so rapidly that their business has surpassed that of many PSBs which are more than 50 years old banks. Even public image of private banks is better and this is why share prices of private banks is valued higher. PE ratio (which is considered as indicator of market evaluation of any company) of PSB is less than four whereas that of private banks is more than 10.
Another indicator of ill health is said to be NPA ratio. If Net NPA ratio is less than one, the bank is considered as healthy. Now-a -days all banks are showing net NPA less than one, as if all Indian borrowers are sincere and honest in repayment of loan they take. Here also private banks show the real NPA whereas PSBs know the art of hiding real NPA and hence they also reflect net NPA ratio as less than one. It is ICICI bank which dared to admit that there was 25% rise in NPA in auto loan last year and they have taken corrective steps to safeguard their capital. On the contrary PSB conceal bad accounts and need not bother for recovery or taking corrective steps. For them it is easier to restructure the loan and postpone the corrective steps for future generation.
It is difficult to distinguish between bad and good bank where figures in balance sheets are cooked, concocted, fabricated and manipulated as per whims of CMD of PSBs. As long as team of Chartered Accountants work in the same fashion as they did in Satyam Computers, one cannot assess the factual position from Balance Sheet of any bank particularly that of PSBs. It can be said with firmness now that Balance Sheet is no more a mirror of business of any company.
As a matter of fact Private Banks have realized during decade old experience that case of default has been increasing sharply due to some restriction imposed by RBI and Government of India on seizure of vehicles from defaulters in concurrence with a few judgments pronounced by Apex Court in this regard. Borrowers as a result are not afraid of any punitive action even if they willfully stop repayment of loan they take from banks. So far as PSBs are concerned , borrowers of all kind ( auto loanee or house loanee or business loanee ) are very much sure that they banks officers can be manage by gifts and cash incentives even if they do not repay the loan in time and ultimately they can manage waiver or loan or compromise settlement.
To conclude it can be said that CMD of {Private Banks has to worry about actual health of their own bank whereas CMD of PSB has to keep FM and RBI Governor happy so that their own future may be brighter. Real exposure will take place only if asset classifications of top three banks are thoroughly checked.
And so far as lending to any sector is concerned, it cannot grow until government is serious and sincere for recovery of loan from those who fail to repay their dues as per contractual terms to bank.
No politics and no sympathy is needed for person who defaults in keeping commitment until there is natural calamity or until the situation goes beyond the control of the borrower. Non repayment of loan is a crime and the criminal must be punished in all sphere of life to maintain social discipline. Obviously demand of private banks for clear guideline for repossession of vehicles from defaulting borrowers is completely justified.
Danendra Jain
28th June 2009
Saturday, June 20, 2009
Expansaion without Man power
Banks had burnt their fingers when they unduly expanded in seventies and eighties during the course of implementation of Service Area Approach when the then government had put pressure on banks to ensure that there is at least one branch in the area of population 10000. Late banks found that most of the rural branches were not profitable and neither viable from any angle of consideration. They then stopped expansion and started merger of the branch.some of the branches were made settelite branch of some big branch or merged with the bigger branch.
They are not again on expansion path without matching increase in manpower. One may very well imagine what will be the health of banking assets and banking man power. It is to stress here that there is no effective tool in the almirah of the bank to ensure recovery of money from willful and recalcitrant defaulters.
Through this open letter I would like to submit following points before the responsible authorities so that real position of banks may precipitate and required regulatory measures may be taken to prevent further deterioration in situation in banks and preventive steps are immediately taken to safeguard the interest of depositors as also that of human resources victimized by greedy executives in banks and dishonest ministers in Government of India.
I would like to know the total amount of loan waiver and sacrifices made by public sector banks during last three financial years including that of agricultural debt relief allowed by central government.
I would like to know the total advance as on 31.03.2006 of total Public sector banks , credit made during last three years and NPA added during last three years , total NPA as on 31.03.2006 and that on 31.03.2009 and out of which NPA accounts pertaining to period before 31.03.2006. This enables us to know what percentage of advances outstanding as on 31.03.2006 is real NPA. Here it is assumed that there will be hardly any addition of Borrowers in the list of NPA who have been financed during last three years. Banks claim that their gross NPA is hardly 2% and hence borrowers are in general honest and to the point in respecting banking needs of repayment and turnover.
Based on real amount of NPA out of advances made by banks upto 31.03.2006 it will be possible for government of India to ascertain the real trend of NPA in Banks in India compared to that of foreign banks, especially USA banks where more that fifty top banks have gone bankrupt during last one year. It will be possible to know the truth only when government will take into account total amount of loan amount waived and compromised during last years .This will expose the real trend of waiver and recovery culture prevalent in banks as also reflect the ineffectiveness of government machinery to recover the dues from willful defaulters.
Can anyone give the certificate from RBI or Government of India that banks are honestly classifying bad assets as bad assets and making correct provision for the same? Or all regulators solely believe on Chartered Accountants and you wait till exposure of CA takes place as happened in the case of Satyam Computers.
Can anyone verify the genuineness of NPA figure of top five or six PSBs and that of SBI to ascertain the real story of banks so that Indian banks do not face erosion of capital as has happened in more than top fifty banks of USA, and many banks of other developed countries.
Is it not the bitter truth that top executives in banks are yes-men of Ministry and top politicians and they in turn have inculcated flattery culture in their respective banks?
Flattery gives rise to corrupt practices and window dressing of figures to please bosses and also empowers top bosses to discard honest and true officers. Banks bosses have enough power to post and promote officers as per their whims and fancies. they have tool in their hands to sideline those officers who tell the truth. Interview panel have the power to reject officers in promotion process specially those who not keep the executive happy. Officers who are not true flatterers are sidelined to rural areas in the name of policy of rural posting framed under directive of government of India. Is anyone sure that there is healthy practice in promotion and posting processes in banks as also in adherence in prudential norms of classification of assets and income recognition.
If most of the top executives in banks as also top officials in banking division of Ministry of Finance including Finance Minister are birds of the same feather, who will bell the cat is a million dollar question?
Danendra Jain
Agartala
21st June 2009
They are not again on expansion path without matching increase in manpower. One may very well imagine what will be the health of banking assets and banking man power. It is to stress here that there is no effective tool in the almirah of the bank to ensure recovery of money from willful and recalcitrant defaulters.
Through this open letter I would like to submit following points before the responsible authorities so that real position of banks may precipitate and required regulatory measures may be taken to prevent further deterioration in situation in banks and preventive steps are immediately taken to safeguard the interest of depositors as also that of human resources victimized by greedy executives in banks and dishonest ministers in Government of India.
I would like to know the total amount of loan waiver and sacrifices made by public sector banks during last three financial years including that of agricultural debt relief allowed by central government.
I would like to know the total advance as on 31.03.2006 of total Public sector banks , credit made during last three years and NPA added during last three years , total NPA as on 31.03.2006 and that on 31.03.2009 and out of which NPA accounts pertaining to period before 31.03.2006. This enables us to know what percentage of advances outstanding as on 31.03.2006 is real NPA. Here it is assumed that there will be hardly any addition of Borrowers in the list of NPA who have been financed during last three years. Banks claim that their gross NPA is hardly 2% and hence borrowers are in general honest and to the point in respecting banking needs of repayment and turnover.
Based on real amount of NPA out of advances made by banks upto 31.03.2006 it will be possible for government of India to ascertain the real trend of NPA in Banks in India compared to that of foreign banks, especially USA banks where more that fifty top banks have gone bankrupt during last one year. It will be possible to know the truth only when government will take into account total amount of loan amount waived and compromised during last years .This will expose the real trend of waiver and recovery culture prevalent in banks as also reflect the ineffectiveness of government machinery to recover the dues from willful defaulters.
Can anyone give the certificate from RBI or Government of India that banks are honestly classifying bad assets as bad assets and making correct provision for the same? Or all regulators solely believe on Chartered Accountants and you wait till exposure of CA takes place as happened in the case of Satyam Computers.
Can anyone verify the genuineness of NPA figure of top five or six PSBs and that of SBI to ascertain the real story of banks so that Indian banks do not face erosion of capital as has happened in more than top fifty banks of USA, and many banks of other developed countries.
Is it not the bitter truth that top executives in banks are yes-men of Ministry and top politicians and they in turn have inculcated flattery culture in their respective banks?
Flattery gives rise to corrupt practices and window dressing of figures to please bosses and also empowers top bosses to discard honest and true officers. Banks bosses have enough power to post and promote officers as per their whims and fancies. they have tool in their hands to sideline those officers who tell the truth. Interview panel have the power to reject officers in promotion process specially those who not keep the executive happy. Officers who are not true flatterers are sidelined to rural areas in the name of policy of rural posting framed under directive of government of India. Is anyone sure that there is healthy practice in promotion and posting processes in banks as also in adherence in prudential norms of classification of assets and income recognition.
If most of the top executives in banks as also top officials in banking division of Ministry of Finance including Finance Minister are birds of the same feather, who will bell the cat is a million dollar question?
Danendra Jain
Agartala
21st June 2009
Thursday, June 18, 2009
Can you reply
Can you certify that in Public sector banks, officers are truly and honestly showing bad advances as NPA in their balance sheet?
Do you think that CMD's of PSBs are not indulged in unhealthy practices and hiding the malady in fear of Ministry of Finance or in greed of some other lucrative posting?
Are CMD's not accumulating disproportionate wealth taking the help of their GM, DGMs and AGMs ?
Don't you think that banks are not giving respect to honest working and giving importance to only those who flatter to Bosses?
Are they not whimsical in posting and promotions? Are they not using provision for Rural posting as a tool to sideline honest officers to rural areas?
What is the meaning of focused points in promotion process for Interview when the services of an officer is tested and attested for a decade or two or three?
Interview gives scope for manipulation and earning bribe for posting and promotions. Do you not realize and accept this bitter truth? This is the tool which enables an executive to select officers of his choice for promotion and cream posting who can help earning illegal money and share with them?
If yes, are you so handicapped that you can not stop it?
Can you order assessment of assets of ALL CMD, ALL GMs and ALL DGM's to start with along with those of RBI too who indirectly promote unhealthy culture?
It is not that all executives / officers are invariably dishonest and disloyal. But it is undeniably true that 20% of bad officers are spoiling the good work done by 80% of officers and executives.
All policies appear to be good on its face value but when the same policy goes to field for implementation , it gets completely distorted , violated or misused particularly in the hand of bad officers and that too with hidden support of top executives.
Do you think that CMD's of PSBs are not indulged in unhealthy practices and hiding the malady in fear of Ministry of Finance or in greed of some other lucrative posting?
Are CMD's not accumulating disproportionate wealth taking the help of their GM, DGMs and AGMs ?
Don't you think that banks are not giving respect to honest working and giving importance to only those who flatter to Bosses?
Are they not whimsical in posting and promotions? Are they not using provision for Rural posting as a tool to sideline honest officers to rural areas?
What is the meaning of focused points in promotion process for Interview when the services of an officer is tested and attested for a decade or two or three?
Interview gives scope for manipulation and earning bribe for posting and promotions. Do you not realize and accept this bitter truth? This is the tool which enables an executive to select officers of his choice for promotion and cream posting who can help earning illegal money and share with them?
If yes, are you so handicapped that you can not stop it?
Can you order assessment of assets of ALL CMD, ALL GMs and ALL DGM's to start with along with those of RBI too who indirectly promote unhealthy culture?
It is not that all executives / officers are invariably dishonest and disloyal. But it is undeniably true that 20% of bad officers are spoiling the good work done by 80% of officers and executives.
All policies appear to be good on its face value but when the same policy goes to field for implementation , it gets completely distorted , violated or misused particularly in the hand of bad officers and that too with hidden support of top executives.
Wednesday, June 03, 2009
India , the most inefficient country in Asia
One of my friends raised a question in a forum in Economic Times which I produce hereunder and submit my opinion thereon.
“Do you think India's surging stock market and strong increase in industrial output and consumption will be a major catalyst to lead the world out of recession?”
There is neither an increase in industrial production and nor increase in consumption. People of India cannot afford buying even essential commodities. If we keep away negligible portion 5% of population which constitute rich and affluent people we will find that India is a country of poor, downtrodden and destitute where per family income is still less than Rs.2000/ a month which is less than even US $50/- .
As such there is hardly any scope of increase in demand and consumption and as a result our country mainly depends on exports and imports. India’s image is projected as the best or comparable with China by our media based on the growth of a few rich people who have been consistently growing and have been ranked in Forbe’s list.
But in fact due to global recession not only India's export has come down; it has adversely affected other sectors too which is visible in production datas released from the government. It proves India depends on global economy more than vice versa. Even agricultural production is not growing as planned by the government inspite of huge subsidies or fund or support said to have been extended by government.
I am unable to understand after all in what respect we are leading. In the recent survey India is categorized as the most inefficient country so far as the work of bureaucracy and that of babus and civil servants are concerned. Singapore has been ranked the most efficient and the top in the efficiency among 12 Asian countries surveyed by the Agency (Hongkong based research firm) whose report published today in Economic Times.
A country where corruption is all pervasive one cannot imagine of real development, real growth and real upliftment in status of general mass. Window dressing, manipulation of figures and concocted balance sheets are helping India in creating image. There are lacs of Rajus (Satyam) and millions of Natwarlals in our country. Even CAs and Doctors who are supposed to save the lives of Human beings and that of Corporates respectively have been found to be indulged mostly in illegal mining of money.
Only silver lining visible to me is that India believes in God and worships God very much devotedly and hence not that much sick of mental agony, depression and other mental madness as it happens in other poor countries. It is however true that India’s position was more pathetic half a century ago or even two decades ago. It is possible there has been slight improvement, but it in no way can be considered that India can lead the world or India can feed the world. One has rightly said that India is unable to feed its own one billion populations satisfactorily and it cannot dream of leading the world.
Stock Market is surging due to many other irrelevant reasons. It has nothing to say about the fundamental of the companies and neither does it reflect the true position of common mass of the country. A few brokers and a few FII have the capacity to twist the direction of Stock market as per their sweet will. If stock market is any indication than Mammohan Singh’s economy proved to be complete failure when sensex came down from 23000 to 8000. When sensex was around 23000, India’s position was not that much strong and India did not became the weakest when sensex came down to 8000.Stock market is more or less a game, equivalent to gambling and less an indicator of health of India’s economy. Stock market cannot be considered as a yardstick to measure the country’s capacity to lead the world or to help the world come out of recession.
Obviously neither Industrial production data nor surge in sensex can capacitate India to lead the world coming out of recession.
Danendra Jain
4th June 2009
“Do you think India's surging stock market and strong increase in industrial output and consumption will be a major catalyst to lead the world out of recession?”
There is neither an increase in industrial production and nor increase in consumption. People of India cannot afford buying even essential commodities. If we keep away negligible portion 5% of population which constitute rich and affluent people we will find that India is a country of poor, downtrodden and destitute where per family income is still less than Rs.2000/ a month which is less than even US $50/- .
As such there is hardly any scope of increase in demand and consumption and as a result our country mainly depends on exports and imports. India’s image is projected as the best or comparable with China by our media based on the growth of a few rich people who have been consistently growing and have been ranked in Forbe’s list.
But in fact due to global recession not only India's export has come down; it has adversely affected other sectors too which is visible in production datas released from the government. It proves India depends on global economy more than vice versa. Even agricultural production is not growing as planned by the government inspite of huge subsidies or fund or support said to have been extended by government.
I am unable to understand after all in what respect we are leading. In the recent survey India is categorized as the most inefficient country so far as the work of bureaucracy and that of babus and civil servants are concerned. Singapore has been ranked the most efficient and the top in the efficiency among 12 Asian countries surveyed by the Agency (Hongkong based research firm) whose report published today in Economic Times.
A country where corruption is all pervasive one cannot imagine of real development, real growth and real upliftment in status of general mass. Window dressing, manipulation of figures and concocted balance sheets are helping India in creating image. There are lacs of Rajus (Satyam) and millions of Natwarlals in our country. Even CAs and Doctors who are supposed to save the lives of Human beings and that of Corporates respectively have been found to be indulged mostly in illegal mining of money.
Only silver lining visible to me is that India believes in God and worships God very much devotedly and hence not that much sick of mental agony, depression and other mental madness as it happens in other poor countries. It is however true that India’s position was more pathetic half a century ago or even two decades ago. It is possible there has been slight improvement, but it in no way can be considered that India can lead the world or India can feed the world. One has rightly said that India is unable to feed its own one billion populations satisfactorily and it cannot dream of leading the world.
Stock Market is surging due to many other irrelevant reasons. It has nothing to say about the fundamental of the companies and neither does it reflect the true position of common mass of the country. A few brokers and a few FII have the capacity to twist the direction of Stock market as per their sweet will. If stock market is any indication than Mammohan Singh’s economy proved to be complete failure when sensex came down from 23000 to 8000. When sensex was around 23000, India’s position was not that much strong and India did not became the weakest when sensex came down to 8000.Stock market is more or less a game, equivalent to gambling and less an indicator of health of India’s economy. Stock market cannot be considered as a yardstick to measure the country’s capacity to lead the world or to help the world come out of recession.
Obviously neither Industrial production data nor surge in sensex can capacitate India to lead the world coming out of recession.
Danendra Jain
4th June 2009
Tuesday, June 02, 2009
Price rise or price fall
People are expecting fall in prices of commodities because the new government has been given full majority and there is no pull and pressure from coalition partners like left front.
Just before election the same congress party leaders, economists and high profile journalists were of the view that India did not suffer much on account of global recession only because UPA could not go for full scale disinvestment under the pressure of left parties. It is also said that great economists like Manmohan Singh and Mr. Chidambaram could keep India decoupled with global recession. This achievement of UPA is said to be the cause of rise of seats of Congress Party in the Parliament. But it astonishes that the UPA government now talking of large scale reformation, speedy disinvestment and more and more power to private sector. And if UPA really succeed in what media is projecting and what congress leaders has been promising after becoming minister I have no doubt that prices of all commodities will go up and up.
As soon as this euphoria over Congress victory is over people realize the real pain of sky rocketing price rise in all commodities. Even cost of home, land or apartment will again rise. This government has started talking with businessmen how to make congress party strong, how to build party fund etc in the name of common men. All freedom will again be given to private sector, prices will continue to be unregulated and common men will continue to suffer more and more.
In the name of reformation, liberalization and globalization our government has been giving more and more power in the hands of private sector and in return enriching fund of not only party but that of self and their kith and kin too.
To add fuel to fire government has been selling the hard earned property (of PSU) through disinvestment. Mr. Manmohan Singh and Mr. Chidambaram have been considered as Pundit and Doctor of liberalization. They have simply sold the PSUs which were developed during Nehru and Indira's regime. They feel proud in selling the property (modern name is disinvestment) and distributing the same in the name of social welfare scheme.
During last two decades government has not built any college or institute, any manufacturing unit, any worth saying hospital or anything of public utility. Even highway project was started by NDA government and not the government headed by UPA.
In rainy days, it is said and seen that common man sells his household goods, ornaments, furniture etc to run his livelihood. Similarly our government feels respectful, elevated and dignified when it sells or disinvest some PSUs, partially or fully.
Our UPA government talks of freedom to banks and then asks PSU banks to finance at lower and lower rates and then advises for writing off the dues of farmers and traders either to create vote banks or for cleaning the balance sheet of banks so that PSU banks can compete with private sector and foreign banks. It is absolutely a cruel joke with banking industry. As a matter of fact political leaders neither think of health of bank and nor do they think of real welfare of farmers.
Inspite of all instructions from FM none of private sector banks have reduced lending rates till date though some of PSU banks have reduced lending rates even at the cost of health of the bank just to remain in good book of the FM. This is because private sector is worried of their profit and about the health of their bank and they hardly give much significance to whether they are in good book of FM and PM or not as their counterpart in PSU bank thinks. Flattery is meaningful of CMD of PSU banks and not that of private banks.
In aviation sector we have seen in the past that private airlines did not reduce airfare despite drastic fall in prices of ATF fuels. Government went of shedding crocodile tears during last six months for sharp rise in airfares but actual airfare did not come down.
Similarly real estate builders have been raising cost of land and apartment by leaps and bounds. During last five six years of UPA regime cost of house has been doubled or trebled by builders. Due to global recession prices were slightly and gradually coming down when left party pulled support from the previous government. But unfortunately again the same UPA has come to power and the same builders have started making contacts with ministers and stated making arrangements for pleasure of ministers and congress party leaders..
It is observed that prices of home has started going up slowly .In the name of low rate flats government has decided to extend support to private builders. Prices will invariably go up in real estate sector and the quality will deteriorate. Government will cry and shed crocodile tears but none of private developer will listen because they contribute to party’s fund only on this condition that they will decide the price and quality of flat and apartment.
Lastly I can say without doubt that prices of all commodities are sure to rise if the same degree of freedom is given to private sector and if the disinvestment process is accelerated and executed as contemplated and spent on so-called social welfare schemes.GDP growth rate is falsely and uselessly projected high by the government by either increasing salary or employees or by giving farms loans or by window dressing in similar way. Actual development and continuous monitoring of prices can only stop price rise and nothing else. Mixed economy is the real solution for common men and neither solely Private nor t solely Public sector can give stable comfort to general public.
Danendra Jain 3rd June 2009
Just before election the same congress party leaders, economists and high profile journalists were of the view that India did not suffer much on account of global recession only because UPA could not go for full scale disinvestment under the pressure of left parties. It is also said that great economists like Manmohan Singh and Mr. Chidambaram could keep India decoupled with global recession. This achievement of UPA is said to be the cause of rise of seats of Congress Party in the Parliament. But it astonishes that the UPA government now talking of large scale reformation, speedy disinvestment and more and more power to private sector. And if UPA really succeed in what media is projecting and what congress leaders has been promising after becoming minister I have no doubt that prices of all commodities will go up and up.
As soon as this euphoria over Congress victory is over people realize the real pain of sky rocketing price rise in all commodities. Even cost of home, land or apartment will again rise. This government has started talking with businessmen how to make congress party strong, how to build party fund etc in the name of common men. All freedom will again be given to private sector, prices will continue to be unregulated and common men will continue to suffer more and more.
In the name of reformation, liberalization and globalization our government has been giving more and more power in the hands of private sector and in return enriching fund of not only party but that of self and their kith and kin too.
To add fuel to fire government has been selling the hard earned property (of PSU) through disinvestment. Mr. Manmohan Singh and Mr. Chidambaram have been considered as Pundit and Doctor of liberalization. They have simply sold the PSUs which were developed during Nehru and Indira's regime. They feel proud in selling the property (modern name is disinvestment) and distributing the same in the name of social welfare scheme.
During last two decades government has not built any college or institute, any manufacturing unit, any worth saying hospital or anything of public utility. Even highway project was started by NDA government and not the government headed by UPA.
In rainy days, it is said and seen that common man sells his household goods, ornaments, furniture etc to run his livelihood. Similarly our government feels respectful, elevated and dignified when it sells or disinvest some PSUs, partially or fully.
Our UPA government talks of freedom to banks and then asks PSU banks to finance at lower and lower rates and then advises for writing off the dues of farmers and traders either to create vote banks or for cleaning the balance sheet of banks so that PSU banks can compete with private sector and foreign banks. It is absolutely a cruel joke with banking industry. As a matter of fact political leaders neither think of health of bank and nor do they think of real welfare of farmers.
Inspite of all instructions from FM none of private sector banks have reduced lending rates till date though some of PSU banks have reduced lending rates even at the cost of health of the bank just to remain in good book of the FM. This is because private sector is worried of their profit and about the health of their bank and they hardly give much significance to whether they are in good book of FM and PM or not as their counterpart in PSU bank thinks. Flattery is meaningful of CMD of PSU banks and not that of private banks.
In aviation sector we have seen in the past that private airlines did not reduce airfare despite drastic fall in prices of ATF fuels. Government went of shedding crocodile tears during last six months for sharp rise in airfares but actual airfare did not come down.
Similarly real estate builders have been raising cost of land and apartment by leaps and bounds. During last five six years of UPA regime cost of house has been doubled or trebled by builders. Due to global recession prices were slightly and gradually coming down when left party pulled support from the previous government. But unfortunately again the same UPA has come to power and the same builders have started making contacts with ministers and stated making arrangements for pleasure of ministers and congress party leaders..
It is observed that prices of home has started going up slowly .In the name of low rate flats government has decided to extend support to private builders. Prices will invariably go up in real estate sector and the quality will deteriorate. Government will cry and shed crocodile tears but none of private developer will listen because they contribute to party’s fund only on this condition that they will decide the price and quality of flat and apartment.
Lastly I can say without doubt that prices of all commodities are sure to rise if the same degree of freedom is given to private sector and if the disinvestment process is accelerated and executed as contemplated and spent on so-called social welfare schemes.GDP growth rate is falsely and uselessly projected high by the government by either increasing salary or employees or by giving farms loans or by window dressing in similar way. Actual development and continuous monitoring of prices can only stop price rise and nothing else. Mixed economy is the real solution for common men and neither solely Private nor t solely Public sector can give stable comfort to general public.
Danendra Jain 3rd June 2009
Comparision of Private Banks
Parameter Private Banks Public Sector Banks
Prudential norms Fulfilled Whimsical
Age of Bank Less than 20 Years More than 50 years
Markety Image Good Bad
Branch Ambiance Good Good in General
Deposit Rate High Low
Advance rate High Low
Retail advances Interest Rate Low High
Spread /profit margin Less More
Government Deposit Less More
Bulk Deposit Less More
Corruption Less More
Yes man to Ministers Less More
NPA Less More
Flattery Less More
Expenses onBoss Less More
Restructuring Advance Less More
Inaugurational Exp. Less More
Gifting to Boss Less More
Executive Wealth Less More
Manipulation Less More
Write off of NPA Less More
Compromise Settlement Less More
Hide NPA Less More
Window Dressing Less More
Inter state Transfer Less More
Remote Transfer Less More
Whimsical Transfer Less More
Branches Number Less More
Total employees per bank More Less
Staff per Branch More Less
Deposit Growth More Less
Advances Growth More Less
Retail asset growth More Less
Outsourcing More Less
Advertising expenses More Less
Salary More Less
Services Charges More Less
Yearly Growth More Less
Monitoring of Advances More Less
Share Value /PE More Less
CASA deposit More Less
Retaul Contribution More Less
Profit and Profitability More Less
Incentive to Staff More Less
Promotion Performer Flatterer
Exploitation of Staff Yes but Happy Yes but Unhappy
Prudential norms Fulfilled Whimsical
Age of Bank Less than 20 Years More than 50 years
Markety Image Good Bad
Branch Ambiance Good Good in General
Deposit Rate High Low
Advance rate High Low
Retail advances Interest Rate Low High
Spread /profit margin Less More
Government Deposit Less More
Bulk Deposit Less More
Corruption Less More
Yes man to Ministers Less More
NPA Less More
Flattery Less More
Expenses onBoss Less More
Restructuring Advance Less More
Inaugurational Exp. Less More
Gifting to Boss Less More
Executive Wealth Less More
Manipulation Less More
Write off of NPA Less More
Compromise Settlement Less More
Hide NPA Less More
Window Dressing Less More
Inter state Transfer Less More
Remote Transfer Less More
Whimsical Transfer Less More
Branches Number Less More
Total employees per bank More Less
Staff per Branch More Less
Deposit Growth More Less
Advances Growth More Less
Retail asset growth More Less
Outsourcing More Less
Advertising expenses More Less
Salary More Less
Services Charges More Less
Yearly Growth More Less
Monitoring of Advances More Less
Share Value /PE More Less
CASA deposit More Less
Retaul Contribution More Less
Profit and Profitability More Less
Incentive to Staff More Less
Promotion Performer Flatterer
Exploitation of Staff Yes but Happy Yes but Unhappy
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