Monday, November 25, 2013

Sickness Of Bank Will Grow Until Netas And Bankers Change Mindset

There is no doubt that new corporate houses if awarded license for opening of new bank will do the banking business for earning more and more profits only. They were and they will be  least bothered of pain of poor and that of common men .

Business houses are booking exorbitant profits in selling of medicines and they do not allow generic medicine business to flourish in nexus with politicians.Poor person cannot dream of medical treatment in private nursing homes and private hospitals because these private institutes are great cheaters, they extort lacs of rupees from patients in the name of small treatment which government hospitals can do in hundreds of rupees. 

Business Houses have raised the prices of houses to sky high and this is why purchasing a new houses ( flats in apartments), has become unaffordable for poor and even top  middle class families. Cost of houses and that of land has gone up ten to hundred  times in last few years and it is going up and up. 

Rich Business houses have raised the education cost , specially for higher education. Poor and middle class families cannot afford admitting their children in private schools and colleges. As long as education sector was not opened for private sector , tuition fees in schools used to be maxmum Rs. 100 per month and similarly hardly Rs.500 in colleges for higher education. Now in the era of reformation , parent has to pay at least a lac rupee as donation as also tuition fee per year for admitting his child in a private school and similarly they have to pay Rs. ten lac to one crore in getting his child admitted in colleges for MBA , engineering and medical studies.

When the position of medical care , education and houses has become so much costly and have beyond the reach of common men only due to deficit administration , lack of monitoring in true spirit and only  because of  failure of the government in keeping institute run by the government in good condition and because of rampant corruption, how one can dream of good results for poor and common men . 

It is the culture of the government first to loot a government organisation, spoil it by mismanagement and make it ineffective and totally defunct and then they plead for handing over the same to private owner . And when they start the process of handing over the sector to private sector they give rise to Coal Scam, Mines Scam, CWG Scam and so on. 

There is no doubt that pubic sector was in the interest of the common men but due to bad politicians, public sector's image is totally tarnished and this has given private sector an opportunity to loot and exploit the consumer and needy persons.

No doubt , when they start banks, they will focus on profits and for this purpose they will have to focus top business houses and to compete with them public sector banks will spend thousands of crores of rupees in only renovation as hither to done to compete with ICICI and HDFC and AXIS bank. 

It will not be astonishing to know that in the era of so called reformation even public sector banks has started focusing on bulk loans to earn profit and almost discarded poor and common men for loaning purpose. Public sector banks in the name of financial inclusion are simply giving free opening of accounts to poor and common men and doing their duty as assigned by corrupt politicians who are playing in the hands of rich houses.

If one peeps into the trajectory of bad assets accumulated in public sector banks, it will become crystal clear that ninety percent of their bad assets are in the hands of rich business house and politicians or families having close nexus with high profile politicians. Number of billionaire has grown in hundreds whereas number of poor has grown in billions.

This is India and Indian story of reformation
And privatization and globalization.

Goods and services not available to India or are available at extraordinary high prices only because many of essential goods  are exported to earn higher and higher profits. Even onions are exported leaving Indians weeping on price rise. There is practically no control of government on black marketing, profit making and hoarding. When prices of any commodity goes up and people of India cry against price rise , clever politicians of Congress Party start talking of  GDP growth and RBI talking on repo Rate etc.

As a matter of fact history repeats itself. After 20 years of freedom, the then Congress Party government realized that private banks were exploiting bank staff and these banks were beyond the reach of common men. Poor were exploited by local money lenders. Smt Indira Gandhi nationlaised the banks and gave great  relief to poor and common men along with bank employees from the clutches of exploiter bank management and local moneylenders.

After twenty years of nationalization , Congress Party led government reaslised that banks were not serving poor and incurring loss due to poor monitoring, they thought it better to hand over the banking sector to private business houses. Again banks discarded poor and bank employees and started serving rich business houses.

Now time is ripe for the government to understand that until politicians change their mindset and they stop corruption completely they cannot dream of any reformation and any help to real poor and real common men. 

I salute AIBEA leaders who have taken the lead to awaken the government from deep slumber and expose the dirty game of bad borrowers. And there is no doubt that awarding new licenses for bank will aggravate the problem instead of solving the problems of common men. Otherwise government will continue to infuse capital in public sector banks and in return private banks will continue to flourish as private telecom service  providers are earning huge profits at the cost of BSNL and private airlines are earning at the cost of Indian airlines.

India needs reformation of mindset of politicians and officials and not that of banks or business sector as a whole. Government cannot save India from disaster only by inviting and promoting FDI until they reform their mindset and remove evil forces from the system completely.

Wage Hike May Be Good Only When Loan Default Is Treated As  Criminal Offence

Expose defaulters who owe banks over Rs 1 crore, union tells Govt-business line

Make wilful default a criminal offence; says debt recast a cover-up for bad loans
The All-India Bank Employees Association, which will observe December 5 as an ‘All-India Demands Day’ to highlight the threat of bad loans to the banking sector, has urged the Government to publish the names of all loan defaulters who owe banks more than a Rs 1 crore.
The association also wants the Government to make wilful default of bank loans a criminal offence, and bring changes in debt recovery laws to speed up recovery of loans.
C. H. Venkatachalam, General Secretary of AIBEA, pointed out in a statement that bad loans in public sector banks had leapfrogged over the last few years. While the gross NPA (non-performing asset) was Rs 39,030 crore in March 2008, it jumped to Rs 1,64,461 crore in March this year.
The quantum of bad loans in the entire banking sector, including foreign banks, is now over Rs 2-lakh crore.
Fresh bad loans were growing at an alarming pace. Quoting RBI data, he said banks had added nearly Rs 5-lakh crore to their bad loans between 2007 and 2013. “There clearly is a nexus among borrowers, banks and political administration,” Venkatachalam said.


He noted that provisioning for bad loans was taking away a huge chunk of banks’ profits. In just five years, between 2008 and 2013, the banks made a bad loan/NPA provisioning of Rs 1,40, 266 crore. “It appears that banks are earning profits only to donate the same to hide corporate delinquency,” he pointed out in the statement.
Of the gross NPA of Rs 1.64-lakh crore, just four top bad loans accounted for Rs 22,666 crore. And, of the gross NPA, Rs 68,000 crore was of borrowings above Rs 1 crore.
The statement alleged that the scheme of corporate debt restructuring was a cover-up for bad loans.
Most banks suppressed the enormity of their NPAs, by showing reduced amounts of bad loans through provisioning, write-offs, concessions, waivers, one-time settlements and other means. “Of late, banks are resorting to heavy restructuring of bad loans to artificially show them as performing loans.”


The amount of write-offs is on the rise. According to the RBI, bad loans worth Rs 1.41-lakh crore was written off during 2007-13. Most of these write-offs were in favour of the big defaulters and corporate borrowers.
At the same time, the provision-coverage ratio was falling. Provisioning was a back-up against any possible contingency, but because of the increase in bad loans, banks were unable to make adequate provisions, thus making the banks more vulnerable to risks.
The current ratio was just 45 per cent, while the average provisioning ratio globally was 70-80 per cent.
In view of the alarming bad loans situation in the banking sector, AIBEA has called upon its members to mount a relentless effort to recover bad loans and save the banks.

Bank Union Opposes New Bank Licenses

AIBEA opposes RBI move to grant licenses to private entities-Business Standard-25.11.2013

Issuing of license will not only result in ignoring the priority sector but will also lead to    profiteering: AIBEA
The All     India Bank Employees Association (AIBEA) has opposed the RBI move to grant banking licenses to private entities and expressed apprehension that this will lead to "profiteering" and is "inimical" to the interest of the country.
"The government is proposing to give licences to various business houses like Tata, Birla, Ambani, etc, to start private banks. This is not only harmful for the country but also make banking very costly.
"The issuing of license will not only result in ignoring the priority sector but will also lead to profiteering as it will be the sole motive of the corporates. We oppose this proposal in toto," said AIBEA General Secretary C H Venkatchalam.
He was addressing a national conference of the Federation of Bank of India Staff Unions here.
The United Forum of Bank Unions, representing employees of public and private sector banks, has already announced observing of a one-day national strike on December 19 for various demands.
"...Prior to 1969, banks were owned by private business houses and because of their mismanagement, banks were nationalised by the then prime minister Indira Gandhi. Now, again giving license to private players will be harmful for our country," he said.

Venkatchalam criticised as "retrograde" the RBI guidelines over foreign banks. "RBI in its guidelines allowed foreign banks to take over our domestic banks even they do just over 3 per cent business in India. This should be withdrawn...We need further expansion of banks and strengthening of PSUs," he added.
Venkatachalam said the strike call was given for demands like takeover and merger of banks, rising percentage of bad loans in banks, handing over rural credit to private contract agencies, outsourcing of regular bank jobs, etc.
He said the AIBEA would observe December 5 as "All India Demands Day" by wearing badges and holding rallies.
"The demands include publishing names of defaulters of bank loans of above Rs one crore; making wilful default a criminal offence; amendment of recovery laws among others," Venkatachalam said.

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