PM Narendra Modi to brainstorm with bankers on public sector bank reforms on January 3-DNA-(My comments below)
Prime Minister Narendra Modi will hold discussions with bankers on January 3 at Pune to draw an "action plan" for reforms in the public sector banks (PSBs).
Modi will be interacting with bankers on the second day of the "retreat" for banks and financial institutions which is being organised to find out "what has gone wrong and what should be done both by banks as well as by the Government to improve and consolidate the position of PSBs" The two-day retreat beginning January 2 will discuss issues like consolidation and restructuring of the PSBs to improve efficiency, capital requirement, risk profiling and debt recovery.
Finance Minister Arun Jaitley, RBI Governor Raghuram Rajan, top officials of the Finance Ministry and heads of PSBs will be attending the retreat which is being called as "Gyan Sangam".
"The final objective would be to prepare a blue print of reform action plan once adopted which could then be implemented by the banks as well as by the Government," according to a release.
Also efforts would be to seek "out of box" ideas from prominent experts and from top level managers attending the retreat.
The other topics of discussion will include financial inclusion, financial literacy, direct benefit transfer, priority sector lending, interest subvention and human resource.
Total Gross Non Performing Assets (NPAs) of Public sector banks stood at over Rs 2.43 lakh crore as on end- September 2014.
The top 30 NPAs account for Rs 87,368 crore ie 35.9 per cent of total Gross NPAs of PSBs.
Public sector banks require equity capital of Rs 2.4 lakh crore by 2018 to meet Basel III norms. For the current fiscal, the government has allocated Rs 11,200 crore for bank
capitalisation. http://www.dnaindia.com/money/report-pm-narendra-modi-to-brainstorm-with-bankers-on-public-sector-bank-reforms-on-january-3-2046651
My Comments are as under -Danendra Jain:
It is a matter of pleasure that our Prime Minister Mr. Narendra Modi will discuss the matter of restructuring , asset quality, profitability etc with top officials of public sector banks, RBI officials and officials of Ministry of Finance. In my view this exercise will prove to be a futile exercise and nothing fruitful will precipitate out of such meeting which will take place with all those officials who are responsible for deteriorating health of public sector banks.
If a thief is asked how to catch hold of thief, it is but natural the accusing fingers will be pointed out towards air or God or some unseen power. It is top officials of banks, RBI officials, ministers , officers of MOF and finally politicians who due to their malicious intention, corrupt mind, greed for power and wealth,dirty politics and polluted mind that have resulted in present bad health of banks.
I have no doubt that they cannot help in improving the health until Government choose to strike at the root cause of sickness . GOI will have to stop flattery and bribery culture from top to bottom and punish all those who wilfully and with bad intention sanction loans to bad borrowers, who wilfully ignored timely action and who due to their polluted mind punished good performers in promotion and awarded flatterers and bribe earners only. All top officials will have to be punished who promoted bribe culture in recruitment, promotion and loaning processes.
Until GOI learn to punish wrong doers in right time , they cannot send a good message down the line and cannot create a good atmosphere which will be conducive for good performers and which will be a fire for flatterers and yesmen.
It is crystal clear to me officials who are going to attend the said meeting will point out their accusing fingers to financial slowdown, global recession , natural calamities, high interest rate etc for present sickness of PS banks and give themselves a clean chit to top officials who are responsible for current sickness. They have been using these excuses quarter after quarter for last five to six years to get rid of burden and consequences of accountability fixing exercise for sins committed by them directly or indirectly. Every quarter they use to say that health of banks will improve from next quarter but it never proves to be a reality.
They will not dare touch politicians and ministers who vitiated banking culture for the sake of their vote bank. They will not dare blame administrative and legal officials who did not act on cases filed in courts or decree passed by courts. They will not blame auditors, rating agencies and team of Chartered Accountants who submitted fabricated and fraudulently prepared balance sheet and who submitted a certificate of good health for all borrowers who are not considered as bad and due to whom banks are full of Non performing assets. They will not blame valuers, advocates and professional who used to give inflated value of collaterals , wrong opinion on quality of landed property kept for mortgage etc.
Obviously the said meeting will prove to be a formality to show that GOI is active . Mr. Modi will have to go deep to know who are real culprit and what the key reason for growing sickness in PS banks and why private banks are growing under same and similar circumstances. Since 2008 clever bankers and clever politicians are blaming Subprime crisis of 2008 which erupted in USA. Unfortunately or fortunately banks of USA have cured the sickness of their banks but management of PS banks in India have ben deteriorating year after year. This is because only because we more often than not treat the main reasons for sickness as remedy for sickness.
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