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