Think About Your Bank

If Position of law and order of any town or state or a country is assessed and ascertained by statistics of crime lodged in the register of police stations or that at Central Bureau of Investigation, it will give misleading conclusion. If level of corruption in any state or in our country is judged by quality and quantity of corruption ralated cases registered with Anti-corruption bureau or CBI or Police or court of law, it will definitely lead us to wrong conclusion. This is because , in our country people do not want to lodge complain or/and police officials do not want to register cases in their books . Police officials torture person who come for lodgement of any complain and if lodged they do not submit genuine report after investigation till they are bribed adequately.

The bitter truth is that if they register all cases honestly , they will have to work more and they will need more and more manpower equipped with infrastructure and arms and ammunition to cope with gigantic task of controlling ever rising crime in the society . In addition to that , it is also true that politicians who rule the state or the country do not want crime graph to rise in books of police . Because if crime statistics grow in volume ,it will tell upon their political career, they think so. They build pressure on police and administrative officials to lodge minimum complain . They cannot build a society and a system where crime will be minimum by creating a fear of law but it is easier for them to ensure that occurrence of crime is not registered in books so that they may at least falsely claim peace in their area.

But the bitter truth is that winnability of any leader does not depend on crime statistics of police or court or CBI or what a politicians claim in a public rally before election, but it solely depends on public perception about law and order situation in that area. People of that area know very well how police department or judiciary functions. Voters who live in the area for 365 days in a year know very well whether there is social security or not, whether police are interested in protecting lives of residents or not and whether they will get help from police in bringing criminals to task. When they feel there is no gain in telling police and rather there is mental and financial loss, it is comfortable for them not to lodge FIR in police and better to bear with injustice .

One more truth is that if any police officer or official working against corruption is rigid to arrest the real culprit to stop crime and corruption, he has to face torturous transfers, humiliation in meetings and finally rejection in promotion processes and loss various incentives in career . To add fuel to fire , corrupt and flatterer officials are elevated which further results in creation of atmosphere which is not at all conducive for crime control and which cannot provide protection to citizen victim of criminals.

Similarly , one cannot judge the performance of any bank merely based on balance sheets published in news papers or put in public domain. Balance sheet figures are manipulated figures in many respect just as it happened in case of Satyam Computers. Game of window dressing or manipulation in financial statement has become the culture of not only banks but all companies and all traders.

Volume of bad debts (Non performing Assets and restructured assets ) are not true and correct what appears in declared balance sheet and profit is not truly the same as it is reflected in audited balance sheet. It is observed that after the implementation of Core Banking Solutions in Pubic sector Banks, volume of NPA has gone up from Rs.40000 crore to almost Rs.10.00 lac crore despite the fact that Government , RBI and Chief of every bank use to claim from time to time that Volume of NPA is strictly in their control and they promise to reduce the same in next quarter. Bitter and undeniable truth is that ,every quarter or alternate quarter , the Chiefs of bank add huge NPA in their books, write off huge volume of bad loans , sacrifice huge amount of public money to please defaulting borrowers , incus huge loss in frauds , but they continue promise to reduce the loss in succeeding quarters. Things will never move in positive direction unless and until corrective steps are taken from grass root level and the genuine reason for sickness is detected and diagnosed.

This dirty culture in banks is because , internal auditors or statutory auditors are not allowed to increase NPA or expose all Hidden NPA in one quarter . There is verbal instructions to all internal auditors not to expose hidden bad debts and not to rate any branch below average rating. Similarly Statutory auditors are supposed to certify balance sheets of branches they audit without any objection or accept what is desired to be accepted by senior officials of the bank. CAs may get all unfair awards to accept what is directed by bank bosses and to conceal all bad points .

If any of them objects and ask for modification in categorisation of assets, they are to loose the business in coming years or face torture if they are internal auditors. These auditors are not given adequate time and manpower support so that they may not go deep into the system. Auditors are supposed to complete audit of big branches in 2 to 3 days and hence they think it safe and comfortable to certify the BS as it is prepared by branch officials. It is a deep rooted conspiracy in all offices including all banks to keep the department of audit , vigilance and monitoring bodies weak in all respects.

Rating agencies are not allowed to rate any company below average. Majority of rating agencies are having tie up with PSBs. If they rate below investment grade, bank will discard such rating agency and choose other rating agency who charge less amount but give better rating to a company and this is also because promoters of company also like rating agency only when they are able to get additional finance and only bank allows hassle free credit to them. As such it is a win -win position for bank officials , company promoters, government officials, politicians and auditors if a company is rated better despite many shortcomings , deficiencies and irregularities in the system. In modern era, auditors ask corporate house how much credit they want to take from banks before finalising a balance sheet . They will frame the financial statement in such a way that bank officials find all financial ratio fit for sanction of addition or new loans. Bank officials also work in nexus with such auditors in many cases.

Bank officials do not want to treat any borrower as wilful defaulter or even simple defaulter because it will expose his evil work or the malicious intention of some of his predecessors who sanctioned loan with negligence or with bad intention of earning money from unfair means. This is why no action is initiated against wilful defaulting companies for years together. Bad accounts are therefore kept in safe mode by restructuring or ever greening of loans. Bank officials teach borrowers how to get higher loan and how to get rid of account slipping into NPA category in the same way Income tax officials with the help of middlemen teach tax evaders how to file Income Tax returns. Guys working for Rating agencies or ISO certification body guide bad companies how to fabricate books and how to get good rating and ISO certification in lieu of some gifts.

Banks are considered healthy if a certificate is issued by Chief of the bank. Corporates and traders are considered safe for lending if they are able to get good health certificates from auditors, rating agencies and credit officials. In our country officers who are corrupt and unclean are requested to submit certificate of good health every quarter in case of all borrowers and all accounts as if Thief are advised to give in writing that act of stealing or robbery did not take place . Officers who are champion in bad lending or in bribe based lending are made auditors or vigilance officer. Or else officer who do not have enough knowledge of banking are appointed and posted as auditors or Risk Mitigating Officers. Munsi Prem Chand rightly wrote in his book that if protectors are damagers and looters, none can stop destruction and disaster. " Jab rakshak hi bhakshak ban jaye to vinas nischit hai"

Likewise , corrupt officials are made members of Interview panel who picks up only corrupt officer for promotion to higher scale or higher level. If an honest officer appears in interview, such members will ask such questions to him which he or she cannot answer. The great fun is that there is no record of interview and hence even if the honest officers replies questions of Interview panel members, he is given lesser marks compared to bad officers who fail to answer any question. I do not know what is need of Interview for promotion and what is tested in two to three minutes of interview when the bank and boss of any office could not assess an officer in two to three decades of his or her real working and well recorded quality of service. Conspiracy behind system of interview is to reject officers of quality and choose officers as per whims and fancies of bosses. This promotes a culture of flattery and bribery and it has damaged the quality of services extended by bank as also quality of assets possessed by banks in public sector . Employees of two to three decades of good service do not elevation in career whereas employees of two to three years service get promotion every time. This has resulted in an atmosphere where good workers do not take part in promotion process and bad officers apply all tools to reach the top position. Outcome is that people are not loyal to bank they serve but they are loyal to only bosses under whom they work.

In our country police officers or administrative officials whose track record is full of corruption and who have been charged of various irregularities are given the responsibility of heading Anti Corruption Bureau in a state or a district body or in a bank.

In railways , all food items supplied in train are invariably of inferior quality because contrators who are given the task of providing food items in running train are to share huge money of their contract value as bribe to officials at various levels. If any passenger lodge complains to competent body or official, he or she is rebuked and tortured . If he chooses to lodge his grievance at Grievance redressal cell, such complains are removed from the system or a stereo type reply is sent to complainant. Even mineral water sold in trains or on platforms are not pure and distilled all the time . New or used Bottles are purchased and impure water is filled up and sealed to sell in running train at premium price . Water which should be made available in Free India is sold at a price of Rs. 20 to Rs.50 per bottle depending upon the demand of water. There is none to check quality of food or water sold either in Railways or elsewhere. It is God who help passenger or take the life of passenger.

Most of drugs and medicine are highly priced compared to generic medicines . But there is none to stop such exploitation by doctors, traders and multi national companies with the support of thousands of sales man and continuous marketing through advertisement. Government hospitals have almost stopped functioning and only death bodies or persons who met accident are taken there for post mortem or for getting an authentic and favourable police report to avoid police action. Similarly medicines are purchased on registers and consumed on registers to earn money by corrupt officials of hospitals run by Government. In public utility department like PWD, REO , Health , minerals etc, majority of payments are released from government exchequer by submitting fake bills or false certificates by engineers or inspectors assigning the duty of certifying the completion of work with quality.

There is a rule that all medicine shop must have on medicine practitioner sitted in their shop. But drug inspectors in general issue permission , say license for starting medicine shop by keeping in record false and fabricated Bio data of a Doctor in record for record purpose. Doctors also sell their certificate to earn a fixed monthly income from such traders. Shop owner buys not only Drug inspectors but also doctors to run a shop and also to sell fake medicines or to practise as Doctor in Shop. Doctors posted in Government run hospitals in villages or in small towns more often than not, perform their duty only by signing on attendance roll and do their private practice keeping some staff in good book.

Similarly government run schools in villages and small towns in general and partially in big towns too are run on registers. Teachers attend schools o registers and students are enrolled and taught only on registers . Students are passed by allowing them to write taking help of books or some other students write on behalf of enrolled student or marks are given without the need of student sitting and writing for examination. You may say in brief , that there are many primary or middle or higher studies schools whose work is to sell degrees only. Teachings and examination are well directed and concocted dramas and people act in a very system manner and well coordinated manner to cheat the system and to favour to a person who is ready to buy a false certificate. Even many engineering and medical colleges arrange for better marks on payment of some money. This is India where quality of a person is ascertained based on marks obtained in examination. This is India where every certificate and degree is purchasable commodity.

In seventies , banks used to sanction loan to needy and credit worthy persons only after making a lot of market enquiries and due diligence. Loan seekers had to prove their credentials , ability to do business and repay the loan in time .Bankers had upper hand in sanctioning of loan. In case of default , borrowers had a fear in mind that he will have to go to jail if banks file case in court of law and at least his peace will be disturbed. Cases of default or that of fraud used to be minimum. But politicians for the sake of vote bank totally changed the equation and work culture in bank. Now loan seekers and loan defaulters have a upper hand and position of bank officials empowered to sanction loan have become pathetic. Bank officials may face dirty and uncomfortable consequences if they do not achieve the target allotted by higher bosses for growth in advances. They have to write off loan or compromise with borrowers even the default is wilful and ill-motivated.

Quality of lending in not at all insisted b seniors sitting at top. Even if loan comes in default category, there is no one to question. Even borrower is not afraid of any punitive action if he or she defaults in making repayment of loan in time. Rather defaulters will complain to government offices or blackmail with officers for compromise settlement or threaten not to repay any amount , come what may. Because defaulters know it very well that bank officials are under pressure to reduce NPA by hook or by crook. In such position it is better, peace oriented and comfortable proposition for a bank officer to sanction loan and earn bribe too, to write off loan or to sanction compromise settlement with huge sacrifice of bank's money and earn blessings of boss and borrower too. Bank officials now do not want to treat a bad loan account as NPA because it will add to their agony and they will face many types of tortures from their bosses.

During the period of emergency imposed by the then Prime Minister Indira Gandhi , there used to be time bound target for each teacher and each government staff and officials for family planning. As a result many forceful family planning took place and even unmarried persons used to be operated to achieve the target. Or staff under pressure of target used to achieve the target by operating fake persons which means even non-existent or already operated person used to be taken to their books to show and prove their achievement of target.

Similarly bank officials opened 15 crore bank accounts in less than a year which they did not open in last two or three decades. This is the outcome of imposed target . Same thing happened with issue of Voter card or Aadhar car . Many voters have got success in getting more than one voter card and more than one aadhar card. Similarly many persons have many accounts in many banks. Quality of opening of account or issue of insurance or sanction of overdraft does not have any improvement. This is why cases of fraud and loss due to fraud has been increasing year after year. Amount involved in bank fraud have gone up from roughly Rs.1100 crore in the year 11-12 to Rs.11000 crore in the year 14-15 . Loans are sanctioned by credit officials or sanctioning authority only to achieve the target and to get untimely and quicker promotion as also to get the opportunity to earn money through unfair means. This is the reason that volume of bad debts have gone by from a few thousands of crores of ruppes to ten lac crore of ruppes during last decade.

Bankers say that if they are not positive, growth of bank will stop and GDP of entire country will come down. They blackmail with government or government blackmail with bankers , both are possible , in the same way as black money holders use black route of P-notes to convert black money to white money and channelize black money to stock market through some tax-liberal countries like Malasia, Hongkong and Singapore. Such king in black money blackmails with the government that if they are trapped or taxed , they will crush the stock market and people of India who are invested in various shares will start crying and finally spoil the future of the ruling party. This is why none of government of last three decades could stop use of P-notes in stock market. Harshad Mehta and Ketan Parekh might have died after committing fraud with the share market but they have taught lesson to many FIIs and domestic players in stock market how to cheat the financial system.

Bad debts in public sector banks is on continuous rise. There are many reasons for a loan to become NPA and many reasons for failure of bankers in getting repayment from defaulters. Reasons are internal, external, administrative political, legal and several others. But in most of cases ,outside reasons and ingenuine reasons are wilfully and strategically assigned by bankers for rise in volume of bad debts in books of PSBs, even if there is default in loan due to wrong lending , bribe based lending or lending to unscrupulous persons in nexus with bank officials or under pressure of local muscle men or political masters. Reasons attributed for rise in defaults are not always genuine reason like failure in business, or failure machines or death of promoters or due to inadequate capital or undue price rise in cost of raw materials.

It has become fashion to put blame on global recession or economic recession or higher interest rate or delay in clearance of project etc. Reason which are beyond human control are generally attributed for rise in bad debts. Obviously when doctors fail to detect actual cause of disease, it is sure that the diagnosis prescribed by Doctor will be misdirected and may take the life of the patient. Doctors nowadays willingly delay the process of curing the patient to earn money through unwarranted pathological tests, use of ICUs or ventilators or through unwarranted surgical operations on patients. In the same way bankers also delay the identification of bad debts.

Similarly bank officers delay the process of treating a account as bad so that actual culprit behind sanction of loan or responsible for monitoring of loan is safely retired or promoted. People in general have the tendency first to save their colleagues than to save the bank they serve. Auditor or Vigilance officers or senior visiting officers all try to change the facts in such a way and frame a report in such a way that actual culprit gets exonerated from all charges. None is interested in safety of bank and this is why PSBs are moving from good to bad, and bad to worse whereas private banks are booking higher and higher business, higher and higher profits and lesser and lesser NPA. In the same legal set up and administrative set up have become almost defunct. Cases in courts are not decided in decades. Banks have to spend good money in recovery of bad money. Politicians also do not want good health of public sector banks , they want their vote bank to become more powerful and permanent.

What is right and what is wrong , I cannot say , but it is true that health of all government departments is not satisfactory and none of officials and politicians are really interested to cure the system . Corrective plans are made, guidelines are issued, rule of laws are changed to accommodate to change the outer look of the patient or ailing bank. But the actual sickness continues not only in banks but in all PSUs and government offices.