Thursday, June 27, 2013

Bad Assets Going Up or Down in Public Sector Bank

Banks in general have again started concealing bad assets and the same hiding approach which was applied when the work of identification of bad assets used to take place manually.

Management of banks in general have started threatening and using coercive methods to force  branch officials, branch heads, regional and zonal heads and top ranked officials  to stop slippage of assets into NPA category and hence they all have started using various unlawful tools to keep the account always standard despite sickness in the account as per RBI prudential norms. They have started using age old ever greening process to keep all accounts standard.   

As a consequence slippage during last two quarters fell    and further due to window dressing in credit growth as also in provisioning, ratio of Gross NPA and that of net NPA to total advances have been contained. 

Reality of bad assets hidden in the banking system and reality of lending culture can come to surface only if hundreds of teams of honest, competent and devoted RBI officials go deep into entire process and work culture prevailing in public sector banks.

One point to be noted here that due to reign of terror let loose by top management in almost all PS banks, there is fear in all field functionaries and there is no doubt that it will adversely affect the bottom line of banks and there is no doubt that the hollowness of banks and unattended cancerous disease will finally cause collapse of entire social banking system in future and lead to growth of private banks and that of exploiter moneylenders.

To add fuel to fire, banks are not using experienced manpower to stop further deterioration in bank’s health and rather they have aggravated the situation by promoting young and inexperienced officers to higher level and posting them at vulnerable key posts.

No doubt , that health of officers in banks is also moving from bad to worse and equally that of family members who are finding themselves totally isolated and uncared .

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