In India committees are formed with
a good intention to stop misuse of powers by individuals. Every company has a
board of directors so that a groups of intellectuals may contribute their
knowledge and skills in best way to protect the organisation. Cabinet of
ministers is formed in Parliament and State Assemblies to support government
and suggest best plan, best policies and best ways to execute the plan in the
larger interest of India. Vigilance team is formed of three or five members so
that one man cannot take biased decision.Indian Parliament is constituted of
542 members elected from different corners with different knowledge base so
that best possible can be done for the country. And similarly committees are
formed at all levels and in all offices to take wise decision on
tenders, contracts, policies, amendment, on charges of corruption,
on irregularities in financial matters of a company etc.
But
unfortunately India is sick of flattery and yesman culture. Due to this most o
f the members of committee think it better to remain silent spectator and sign
blindly on all proposals and endorse all decisions taken by the head of
committee or by High Command. In political party, members of the party do not
apply their mind in most of the cases and they simply say YES to all line of
action what their High Command proposes.
In
Parliament too, most of decisions are taken by a few ministers and cabinet
blindly say YES to all decisions. Majority of bills are passed in Parliament
not by discussion or debate by voice vote and in all such cases members of
ruling party are supposed to support the bill and that of opposition are
supposed to protest the passing of the bill. In the recent past at the instance
of Rahul Gandhi , ordinance approved by cabinet and sent to President of India
was taken back just to please the High command of the party.
Similarly in
banks, most of the high value loans are passed by Board of Directors or
Management Committee constituted by directors, ministers and representatives of
the government. Two years ago RBI directly all banks to constitute Credit
Approval committee (CAC) or Loan Approval Committee (LAC) even at all
Administrative offices so that all credit proposals are process and passed
after thorough scrutiny by a team of talented persons go through it and assess
the pros and cons of the proposal from all angles of consideration.
But in
practice it is again the whims of the Regional Head or Zonal Head which
prevails and other members of the Committee blindly sign and think it safe not
to say anything which may invite anger of the boss or which may result in
critical transfer or his rejection in promotion process. Obviously it is
flattery culture or the fear psychosis or yesman culture which has
damaged the fundamentals of all banks and similarly all public
sector undertakings.
In case any members try to put forward
shortcomings , deficiencies risk of any proposal , he is removed from the
committee and substituted by unskilled officer so that hurdle in
smooth passing of bad proposals are removed. In the same a MP or MLA is
made Minister or removed from Ministry as he or she is found to
be yesman or boss or is found to be straight forward in keeping the matter in
true form without fear of his or her boss.
Even audit
teams or investigating committees or CAG or CBI or CVC or CVO fail to exercise
their duties freely in fear of repercussion from top officials if they dare
move against the line of action which the boss dictates in normal course of
business.CVO or CVC or directors of CBI or even judges are selected as
per his or her proximity with powerful persons of when he or she is recommended
by some VIP, Merit of the person never matters much in selection of
persons for creamy post.
( Below given is a link which proves how committee aprroach exonerated an SBI top officers despite serious charges leveled by CBI)
( Below given is a link which proves how committee aprroach exonerated an SBI top officers despite serious charges leveled by CBI)
As such it
is totally unacceptable when Finance Minister put entire blame on bankers for
rise in bad loans. Finance Minister Mr. P Chidmabram is totally wrong to say
that rise in bad debts is due to the fact bankers in having Cozy relation with
corporate.FM is telling a complete lie when he says
that bankers and corporate have entered into a Cozy relationship.
It is rather FM in particular and politicians
in general who have responsible for bad culture prevalent in public sector
banks and public sector undertakings as a whole. ‘Yes Sir’ culture is the root of all maladies
rampant in the system. The habit of extending red carpet welcome to bosses and
ministers and spending lac and crores of rupees for show Business or to please
ministers has damaged the work culture badly. It is the culture of promoting
flatterer at the cost of honest performer which has ruined the country .I do
not want to name any minister , but I do not have hesitation in saying that
politicians or officials who enjoy power in the country are worshipped like GOD
and this culture has badly damaged the mindset of real workers.
After all it
is Finance Minister and his team who selects a bank officer for the post of
Executive Director or Managing Director of a bank. It is officials of RBI
and Ministry of Finance who are supposed to act as watchdog on
functioning of banks and on activities of executives of banks. It is
their duty to stop corruption and break the said cozy relationship between
bankers and corporate in the interest of the nation. But unfortunately it
is officials of RBI or ministers who teach and who promote bad culture.
If a
constable is given cream posting by Inspector taking huge sum in bribe, it is
certain that the constable will indulge in corruption to earn more and more. If
a teacher is recruited or a CVO or ED and CMD or banks are appointed only
when he or she is ready to spend lacs of rupees directly or indirectly on
bosses ( who are empowered to select), it is hundred percent certain
that such executives and officials will promote only corrupt
culture.
It is
therefore need of the hour to strike at the root of all corruption. Process of
reformation and transformation will start only when people stop flattery and
yesmanism and public servants are in a position to serve without any fear of
repercussion. Supreme Court in the recent past instructed GOI to stop whimsical
transfers and promotions and adopt transparent policy for such decisions. Court
ordered to have a fixed tenure transfer policy and have a system wherein
aggrieved person can lodge the complain without any fear of bosses.
Million
dollar question is who will bell the cat and when?
Banks and corporates have entered into a cozy relationship: FM-Business Standard-15.12.2013
Says working capital loans to companies have hit growth of corporate bond market
Finance Minister P Chida-mbaram on Saturday said non-performing loans (NPLs) in the banking system were on the rise, as banks and companies had entered into “a very cozy relationship”. He added lenders had been asked to “get cracking” on recovery and avoid extending loans to companies for working capital needs so that companies tapped the corporate bond market.
“NPLs are high, as the recovery mechanism had stopped. Banks were tardy and, to some extent, soft on recovery. We have failing companies and prosperous promoters. We have to recover these loans,” Chidambaram said at a panel discussion organised by the National Stock Exchange (NSE) on the occasion of its 20th anniversary.
“Now, bankers have been told in no uncertain terms, by both the government and the regulator, that they have to get cracking on recovery,” he added.
The finance minister said the NPL figures appeared exaggerated compared to 10 years ago, as banks had moved to system-based NPL detection. “2004 (NPL) numbers don’t compare with 2013 numbers. These are the true numbers; these are not exaggerated. The earlier numbers were suppressed numbers,” he said. “From the 2004 NPL identified by managements of banks, we now have moved to system-detected NPL. Bank manager can no longer hide NPLs.”
“At least, we now know the size of the problems. We have to tackle these,” he said.
“Banks and corporates have entered into a very cozy relationship. It’s very convenient for corporates to go to a bank, even for working capital. It is unheard of in any other developed economy. It is very convenient for a bank manager to lend working capital to a highly rated corporate...The corporate bond market is not developed because corporates think banks are ready to give money to them. It is only when the banks say no to corporates, will they be forced to go to a bond market. Today, (lenders) are happy to lend,” he said.
The finance minister suggested the existing infrastructure of the stock market be used more effectively to develop the corporate bond market.
Earlier this year, the three stock exchanges in India had set up a separate debt segment for trading in corporate bonds. However, volumes in this segment haven’t seen a pick-up yet.
On whether the government, which is the promoter of several big banks in the country, should be blamed for bank behaviour, Chidambaram said the government didn’t interfere in banks' affairs. “Ask any bank managers whether I have, in eight years of being FM, ever told them to lend to somebody. And, even if I told them, (ask) whether they listened,” he said.
He said the blame should fall on the bank's board, not on the government. “On the board, the government has one nominee. But there are also independent directors, a chairman and a managing director; there is a regulator. If the banks and bank boards have not performed their duties, the blame should stop at bank boards, not the government.”
http://www.business-standard.com/article/finance/banks-and-corporates-have-entered-into-a-cozy-relationship-fm-113121400500_1.html
It will not be incorrect to say here that CAC concept was introduced with the declared purpose of making sanctioning process more effective and transparent. But in practice hidden purpose of CAC concept was to provide shield to cover the corrupt dealings of top officials of the bank who sanction loans only after accepting gift in cash or in kind.
It is open secret that high command or the chief of an organisation works behind the screen and he is awarded if some good results precipitate but on the contrary when a decison is taken with dirty mind and the outcome goes wrong, the accusing fingers are pointed out towards juniors who processed the proposal and who submitted the same before CAC.
Only IT officials can expose the real devil functioning behind CAC if they dare assess the assets of top officials of bank to find out whether they are in disproportionate to their total income.But do they have so much courage to move against the wishes of their mentor ministers?
Are they not worried of torturous transfers and charge sheet as Mr. Khemka is facing in Harayana?
Rather I would like to suggest Government of India to assess the functioning of Credit Approval Committee (CAC) which were framed in almost all public sector banks two years ago at the instruction of Ministry of Finance.While making honest assessment of CAC, Government of India will have to keep in mind how in the recent past ,at the instance of Rahul Gandhi the ordinance passed by cabinet allowing criminals to contest election against the wishes of Supreme Court was withdrawn by the cabinet.This example is enough to illustrate how Yesman culture taken deep root in the entire system in the country.
http://importantbankingnews2.blogspot.in/2013/12/sbi-exonerate-officers-charged-by-cbi.html
“NPLs are high, as the recovery mechanism had stopped. Banks were tardy and, to some extent, soft on recovery. We have failing companies and prosperous promoters. We have to recover these loans,” Chidambaram said at a panel discussion organised by the National Stock Exchange (NSE) on the occasion of its 20th anniversary.
“Now, bankers have been told in no uncertain terms, by both the government and the regulator, that they have to get cracking on recovery,” he added.
The finance minister said the NPL figures appeared exaggerated compared to 10 years ago, as banks had moved to system-based NPL detection. “2004 (NPL) numbers don’t compare with 2013 numbers. These are the true numbers; these are not exaggerated. The earlier numbers were suppressed numbers,” he said. “From the 2004 NPL identified by managements of banks, we now have moved to system-detected NPL. Bank manager can no longer hide NPLs.”
“At least, we now know the size of the problems. We have to tackle these,” he said.
“Banks and corporates have entered into a very cozy relationship. It’s very convenient for corporates to go to a bank, even for working capital. It is unheard of in any other developed economy. It is very convenient for a bank manager to lend working capital to a highly rated corporate...The corporate bond market is not developed because corporates think banks are ready to give money to them. It is only when the banks say no to corporates, will they be forced to go to a bond market. Today, (lenders) are happy to lend,” he said.
The finance minister suggested the existing infrastructure of the stock market be used more effectively to develop the corporate bond market.
Earlier this year, the three stock exchanges in India had set up a separate debt segment for trading in corporate bonds. However, volumes in this segment haven’t seen a pick-up yet.
On whether the government, which is the promoter of several big banks in the country, should be blamed for bank behaviour, Chidambaram said the government didn’t interfere in banks' affairs. “Ask any bank managers whether I have, in eight years of being FM, ever told them to lend to somebody. And, even if I told them, (ask) whether they listened,” he said.
He said the blame should fall on the bank's board, not on the government. “On the board, the government has one nominee. But there are also independent directors, a chairman and a managing director; there is a regulator. If the banks and bank boards have not performed their duties, the blame should stop at bank boards, not the government.”
http://www.business-standard.com/article/finance/banks-and-corporates-have-entered-into-a-cozy-relationship-fm-113121400500_1.html
It will not be incorrect to say here that CAC concept was introduced with the declared purpose of making sanctioning process more effective and transparent. But in practice hidden purpose of CAC concept was to provide shield to cover the corrupt dealings of top officials of the bank who sanction loans only after accepting gift in cash or in kind.
It is open secret that high command or the chief of an organisation works behind the screen and he is awarded if some good results precipitate but on the contrary when a decison is taken with dirty mind and the outcome goes wrong, the accusing fingers are pointed out towards juniors who processed the proposal and who submitted the same before CAC.
Only IT officials can expose the real devil functioning behind CAC if they dare assess the assets of top officials of bank to find out whether they are in disproportionate to their total income.But do they have so much courage to move against the wishes of their mentor ministers?
Are they not worried of torturous transfers and charge sheet as Mr. Khemka is facing in Harayana?
Rather I would like to suggest Government of India to assess the functioning of Credit Approval Committee (CAC) which were framed in almost all public sector banks two years ago at the instruction of Ministry of Finance.While making honest assessment of CAC, Government of India will have to keep in mind how in the recent past ,at the instance of Rahul Gandhi the ordinance passed by cabinet allowing criminals to contest election against the wishes of Supreme Court was withdrawn by the cabinet.This example is enough to illustrate how Yesman culture taken deep root in the entire system in the country.
http://importantbankingnews2.blogspot.in/2013/12/sbi-exonerate-officers-charged-by-cbi.html
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