Tuesday, March 25, 2014

Why Only UBI IS Exposed?

It is now detected and well established by Auditors that top officials of the bank used to switch off the button which automatically detect bad debts. Since long, apprehension from many corners have been expressed candidly that bank officials use to hide bad debts to book higher profit by making lesser provisions.

But unfortunately RBI and Ministry of Finance willfully remained silent spectators of all such evil acts so that people cannot point out accusing finger towards them and they continue to use the public applaud for shining banks.

Due to such indifference and killing silence, customers and investors along with bank staff are sufferer and there is none to compensate them .Customers of the banks are not getting loans and adequate services due to demoralized mindset now, Investor shareholders of UBI have suffered loss in share value and staffs of blacklisted bank are denied wage hike.

Auditors say that it is not clear who are behind this menace and this dirty act. Auditors are again managed to write the story of doubt which portrays a soft picture about continuing fraud so that top officials who are mastermind behind tapering of the system are exonerated by giving benefit of doubt.

Some questions arises in my mind which are as follows

First and foremost question is who used to control the technology and the system and are they booked to task?

Who are the officers entrusted to monitor the functioning of the system and how they failed to detect the technological fault for such a long period?

 Were officers not tallying and matching the system generated bad debts from manually detected bad debts?

Whether branch Officials who were in direct touch with bad accounts did not point out the faulty outcome shown by the system? 

Or top officials themselves managed the ill-motivated task at their end i.e. at central office?

Each bank and each branch of the bank used to run and were supposed to run parallel manual exercise for detecting and identifying bad debts to synchronize the mechanized system of detection of bad debts until machine starts giving correct result. 

Why banks failed to do such exercise and who are responsible for such gross negligence?

Was it not a intentional conspiracy of seniors to conceal bad debts?

How the switch remained off for years and prudent officers could not sense it in time? It gives stinking smell of the dirty intention behind such foul game.

It is definitely not controlled by any junior or middle management officer. Without concurrence and guidance of top officials, junior or senior officers do not have courage to play with the well protected system.

Is it not true that top management of the bank willfully reduced NPA to present better balance sheet and then to ensure grand success of public issue which UBI had to bring in the market in the year 2010. 

Will RBI call explanation of ED and CMD of last ten years and also the type of culture they inculcated in the bank and type of culture they inherited from their previous banks to assess the character, knowledge and greed for money and post?

Will RBI also peep into the performance of those banks where from they were elevated to the post of ED or CMD?

RBI has ordered scanning of new loan accounts disbursed by new CMD, But result of such audit may not tell truth of the past loans which has turned NPA this year .

 RBI is trying to cover up the evils of past ED and CMDs who allowed and promoted bad culture for their vested interest?

If RBI punishes all responsible General Managers, EDs and CMDs of last ten years who failed to keep technology working without tapering ,who failed to ensure switch on of Infosys system and software and  who committed irregularities either in sanction or in monitoring, the message will go to other banks too and thing may improve at least from now.

It is open secret that banks are still involved and indulged in bad lending and there is no doubt that bad loan will rise every quarters to come and in all public sector banks. I have no doubt that same position exists in all public sector banks as it is found to be in United bank during forensic audit . Every bank has kept switch off willingly and intentionally to keep NPA low. Only difference is that new lady CMD of UBI has not tried or failed to managed auditors in hiding NPA whereas other ED and CMDs are clever and smart to prevail upon auditors to get the certificate as per their sweet will.

Will RBI order conduct of forensic audit of SBI where volume of bad debts run in lac of crore of rupees.

 If RBI can protect loss arising from such bad assets,I hope bank staff can be paid 100% wage hike without creating any fall in their future profit.

Second question is whether the top officials of United bank of India were and are so much ignorant about the health of high value loan accounts that they could not think it wise to test the correct working of their machines.

Whether it is not their duty to verify the correctness of the volume of bad debts?

A true banker knows very well the prominent loan accounts which are sick in quality or on the verge of going sick.

Rather it may be said without doubt that it is a well planned way of concealing bad debts and this dirty game has been persisting in almost all public sector banks since long. It is not a story of two or three years as claimed by clever and managed auditors, it used to be there even when machine or core banking solutions were not in place.

When CBS system technology was not in vague and manual working was done in bank to identify bad debts, top officials of banks used to say openly in meeting that none of branch head can declare any account as NPA until they are permitted by top officials on phone. Not only this , if any courageous officer dared defy the verbal guidelines of their bosses and used stick to RBI norms in identification of bad assets , they had to bear the brunt of top management . And without fail such sincere officers were rejected in promotion process and got the most critical remote transfer orders.

Further it is not only a singular case of making less provision to inflate profit of the bank, RBI is well aware how top officials of the banks used to make lesser provision or make no provision for pension and other terminal benefits to inflate profits. 

When this fraud was detected, RBI officials or officials of Ministry of Finance who were from behind the scene working in collusion with top officials of the bank and who used to misguide in banker meeting and who were protecting dirty game of bad bankers, allowed banks to make provision for residual terminal benefits and pension and amortized the same in five years so that huge burden may not adversely y affect the balance sheet of a bank and tarnish the image of the bank. If bad news spreads in the market, the share value could fall sharply and the wealth of many stalwarts could vanish who had invested huge money in shares of the bank.

Obviously there is no doubt that the fraud which has been detected by auditors in United Bank of India was committed by top officials of the bank and it is the duty of regulating agencies and CBI to call for explanation from Head of the bank and that from General Managers and Executive Directors who were mastermind behind the dirty tricks. Further they should try to peep into the balance sheets of other public sector banks so that the greatest scam of the country could come on the floor and people of India may understand the risk ahead.

All guilty, persons, whosoever it may be, heavy weight or low weight officer, must be punished in the larger interest of the customers investors as also staff working in the bank. Management of United bank has cheated investors by hiding bad assets , by making lesser provision and by showing inflated profit. Even  SEBI should  look into this fraudulent game with investors played by UBI  when they came out with public issue in the year 2010..

Exposure of UBI management  will open the eyes of Finance Ministers and politicians who has damaged the fundamentals of the bank by adopting vote bank policies and by pressurizing top bankers verbally to go for all such acts which adversely affects the profitability of the bank.

Especially PC should be made to understand that if bank staffs are not well paid and if bank staffs are not awarded for honesty and sincerity, health of banks has to be bad.

If flattery is the only quality for promotion and respect, volume of fraud and bad debts in government bank will continue to rise and endanger the deposit of innocent common men who keep their hard earned money in government banks only considering them safer than private banks.  

I therefore always say that as long as flattery and yesmanism is the culture in any bank or in any office good workers cannot survive respectfully and only bad officers will prosper and the bank has to suffer in its intrinsic value. Exposure may be delayed by clever team of corrupt officers.

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