Reasons Behind Rise In Bad Debts In Banks

Lacs of cases against defaulters of the bank and against NPA borrowers have been filed in various local courts, district courts, Lok Adalats, Ombudsmen, High courts, Supreme court, Debt recovery Tribunals, District Certificate Officers, District magistrate’s court , Sub Divisional Magistrate’ court for taking possession of property seized under SERFAECI act etc have been filed by various financial institutes including public sector banks but due to manpower shortage or due to inefficiency of executives, or due to malicious intention of magistrates and judges, or due to conspiracy of advocates in nexus with judges and magistrates cases are lying pending for years together.



Is there any provision to take action against judges who in nexus with advocates are willfully delaying the process of justice?

If yes, has any government taken any against any corrupt judges in the past which could demonstrate the effectiveness of the Law and willingness of rulers to punish the corrupt judges before it is too late?

Has any of the government taken any drastic step to reduce pendency in courts and to expedite award of justice?

What action government has taken against the judiciary and advocates in recovering the money of banks which have been locked in willful defaulters of the bank?



It is observed that banks have granted loan against fake deed of landed property or financed to many firms against the collateral or prime security of same laded property.

Have government punished any of Sub registrars or deed writer or bankers who worked with negligence and malicious intention?



Banks sanction new loans and advances on the strength of prime of collateral security valued by approved valuers or government recognized valuers. But if these valuers give inflated value of any property after taking extraordinary service charges from loan seeker or with some vested interest or with malicious intention and in turn jeopardize the loan disbursed by banks, what remedial recourse lies with bankers or the government. Bankers at most remove the name of such valuers from their panel or the government blacklist such valuers.

Is there any provision to punish such valuers?

If yes, has any authority or any bankers have ever punished such unscrupulous valuers?

It is observed that Chartered Accountants blindly sign on balance sheets or financial reports of banks and borrowers, companies and firms if they are given attractive amount of money as service charges. These CA while conducting statutory audits of various banks more often than not ,simply put their seal and signature and take attractive fees and charges from banks. Wage without work is the suitable slogan of CAs.



It is also true that CAs have to complete audit of two to three branches in a period of five to six days and hence they can neither make honest and through scrutiny of records of branch of the bank they are asked to audit by RBI nor they have the will to do so because there is no deterrent action if they prefer not to do their duty honestly.

Have government taken any action against any of CAs in the past 60 years which could teach a lesson to team of CA?

Have government pondered over the real need of time period to make a serious scrutiny of balance sheet of a branch?

Or it is planned diplomacy of clever bankers to give minimum time to CA or for that matter any inquiry or vigilance officer so that he comes under pressure and sign the financial papers hurriedly ignoring the faults and mistakes.

Due to sheer negligence and malicious intention of the controlling, monitoring and regulating officials .Chartered Accountants in India have become habituated to claim gift, bribe, grand hospitality and all out of pocket expenses to sign a balance sheet , which may be right or wrong, true or false, actual or inflated. It is only a few stray cases where CAs are greedy and bank officials are dry honest and simple hearted that some of the irregularities are reported in audit report.



It is worthwhile to mention here evil deeds of owner of Satyam Computers was not detected by team of Chartered Accountants and similarly less provisioning made by public sector banks including SBI towards their regular liabilities such as pension, gratuity, NPA was also not detected by team of CAs who use to audit the bank year after year.



Similarly there are advocates who give legal opinion blindly and cause huge loss to banks who on the basis of favourable legal reports and search reports sanction loans to loan seekers and who ultimately become victim of negligence and malicious intention of the advocates. RBI knows very well that huge amount of banks have become irrecoverable only due to multiple financing on same landed property or due to financing on fake deed or due to wrongful and unlawful sale of property already mortgaged to some bank for taking loan.



Have Government taken action against any advocate or any sub registrar or Any Deed writer or any officials due to whose fault banks had to suffer huge loss?

Never ,,, Never because none of government department and offices really want to work especially top ranked officers who are busy in passing the time and retire . Officials in all offices and departments usually remain in search of some clients who can offer attractive bribe in cash or in kind or some precious gifts in lieu of service he extends.



Bank officials who sanction credit after taking bribe are able to please their bosses and ensure their timely and unusual promotion and get choice posting. Honest and intelligent officers are sidelined and posted at critical place or remote rural centers so that their voice against evil work may be stopped. Good officers are denied their promotion in time and juniors are given change after taking bribe. Has government ever tried to stop such bribe based promotions and transfers. Not only this even direct recruitment of officers in various scales is also undertaken by bank officials to earn bribe , campus recruitment is allowed in a college based on whims of some senior officers to give favour to his own boys and girls , of his own community. Not only in banks but top ranked officials of all state governments and central government resort to mass transfer and earn money in lieu of giving favour to staff who desire choice posting and timely promotions.



Police officers do not lodge FIR in their registers, do not execute warrants issued against VIPs by various courts ,do not question criminals but tortures the person who wish to lodge complaint against criminals , defaulters and law breakers.



Has government taken any step in last 60 years to change the system and procedure of police department which give them unrestricted powers and which tempts them to take whimsical decisions and arbitrary action against honest and true citizens?



Hundreds of cases filed against corrupt officers related to misuse of power, fraudulent activities, bribe led lending, lack of monitoring, negligence of duty, favour to dishonest contractors, passing of bills of unscrupulous suppliers, passing of fake bills or inflated bills either lie pending for disposal for years together in the office of Vigilance office, CBI,Anti Corruption bureau, or Human resource department for decisive action against erring officers or such files are closed acquitting erring officials . New trend has developed in government offices to burn the loss of files related to corruption of high profile officers. File are made untraceable or declared lost.

Why?

Is there any mechanism or tool in the rule book or almirah of the government to prevent such malpractices which frequently and recurrently occur almost in all offices, departments and Secretariats of various Ministries?



Political stalwarts spread propaganda that loans of poor farmers or big businessmen will be waived by the government or by the bank .Such ill motivated propaganda ultimately vitiates the atmosphere of recovery. Government announces waiver scheme from time to time for electoral gain. 

As a result borrowers of the bank willfully default in repayment of bank loan. Quantum of Non Performing Assets known as bad assets in public domain continues to rise year after year in all public sector banks. Then process of compromise and write off starts at bank level and again there is unhealthy transaction of money between bankers and borrowers or between brokers and officers who decides to sanction sacrifice loan amount. Ultimately culture of non-re payment of loan by borrowers back to banks takes the root and bankers have to suffer huge loss due to high provisioning and due to rising NPA. For this purpose bank officials , union leaders and politicians all are friends and relatives of each other.



Government has not courage, no will, no effective tools to punish bad politicians because government is made of such corrupt politicians only. Government has no courage to punish kith and kin of powerful politicians and bureaucrats who have willfully defaulted in repayment of bank loans and payment of tax dues or other charges due to government.



This is why there is mass upsurge against rampant corruption and people of India have started raising voice against corrupt system.

Government can punish Ramdeo or Anna Hazare but cannot stop public revolt.