Non Performing Assets in Banks
It is not easy to corrupt practices prevalent in Public Sector Banks .Work done through contractors or goods bought through suppliers either through tender or without tender are more often than not of inferior quality, everyone knows it. Until management, government, judiciary, regulatory agencies, vigilance officials, monitoring officials, auditing officials and the concerned executing officials are honest one cannot imagine of punishment to guilty officials or to contractors who use inferior materials in construction works or to suppliers who supply lesser goods and inferior goods and charge high value.
Banks therefore cannot stop corrupt practices in contractual work related to furnishing of premises or renovation of bank’s branches, ATM centers or administrative offices, but it can definitely stop corruption involved in its lending business. Though it is not easy to make the system fool proof of corrupt practices but a little effort in this direction may help in reducing the level of malicious lending and in turn help in keeping the NPA level as low as sustainable.
But the task of purification and punishment must start from top officials who support, propagate, irrigate and promote corrupt practices in lending. We have to punish top officials who indirectly or directly prefer commission in bulk lending, who aspire for costly gifts from junior officials on financing made by branches and who desire red carpet welcome is extended to them wherever they visit. We have to change rules and practices which discourage honesty and loyalty.
It is worthwhile to keep in mind that top official who are basically corrupt and possess acute greed for money do not leave any witness or evidence which can be helpful in trapping them or which helps in substantiating charge of corruption against them.
Top officials manage bribe through a few hard core flatterers in the organization. Such flatterers have strong liaisoning with all high profile personalities in all departments and they can easily manage closure of any file which may go against them and they can shut the mouth of all protestors.
RBI or any other monitoring agencies can at least identify the executive of the banks whose past and present is bad and who are condemned by all. For this purpose they should prepare a list of bad borrowers (NPA) involving rupee one crore and more (to begin with) and try to find out the name of the executives who are responsible for bad lending .There may be cases of account turning bad due to various reasons which are beyond the control of bankers may be ignored, But advances which turned bad due to faulty and malicious processing must be analyzed thoroughly and honestly by a devoted team of bank officials chosen from other banks.
Executives who are instrumental in bad lending and still posted at high places send a wrong message down the line. If corrupt officers are promoted and made organizational head or Branch head or circle head in a bank there is no doubt that junior officials will also indulge in bad lending in greed of money and instances of bad advances will increase. In such system good officials are normally shunted in remote and critical areas and ignored in promotion processes.
It is therefore required to know the name of all loans and advances made by all top executives in past ten years and ascertain whether they are still good or turned bad in a few years or even written off by clever gang of General Managers and cleaver board of directors.
Serious analysis of bad borrowers will reveal that creators of all NPA accounts are holding top posts in the same bank of have become ED or CMD of other bank. If bad executives are replaced by devoted officers of the same bank violating existing promotion policy or transfer policies I think the level of NPA will come down in coming years. Otherwise the deterioration cannot be stopped and banks have to face serious financial trouble in near future.
As a matter of fact dishonesty has become the best policy in all offices owned by the government partially or fully. It is disheartening that even officials who are made for stopping malpractices and for punishing corrupt officials are themselves corrupt. Then who will take action and against whom, only God knows. And this is why it is said that corruption has become the accepted system in India.
Problem arises only when there are differences over the rate of sharing ill earned money among the team of officials who promote bad culture or when top officials receive bribe money but fail to extend desired help to bribe giver.
Lastly if there is a will there is a way. If one wants to lower corruption level in any office or government department there are several ways to accomplish the same. If the head is clean, he can at least endeavor in this direction to some extent, but if the head is dishonest one cannot dream of healthy practices down the line. Unfortunately honest officers are very rare and even there are a few they cannot survive and prosper in their career.
17.11.2010
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