Increasing NPAs in India

Kashmir Times. Dated: 6/14/2018 9:55:56 AM

Doing away with political interference and professional management of Public Sector Banks can help bring down NPAs

Increasing Non-Performing Assets (NPAs) reported by most Public Sector Banks (PSBs) and bank frauds committed by some corporate houses across the country during the past four years of NDA-government should act as an eye-opener for the common masses. Such developments also need to be taken up seriously by the central government and the Reserve Bank of India (RBI). The latter being a regulator and auditor of all the PSBs has shown discreet carelessness in checking the banking frauds and monitoring the advances of loans to defaulters during the past four years in particular. In the same direction, the Parliamentary Standing Committee on Finance has also put tough questions to the RBI governor in its briefing but no remedial measures have been suggested. In fact, the RBI governor Urijit Patel has reportedly expressed his inability to check the bank frauds and extension of loans to some entities, which became defaulters despite the knowledge of the government in less than three years. In fact, there are many other corporate houses which are waiting for an opportune time for declaring bankruptcy and claim waivers from the banks in connivance with the politicians, who are ruling the roost in the government. It is unfortunate that the politicians are not taking any responsibility for interference in the operations of the banks that have extended loans to willful defaulters. The blame has been shifted on to the bank employees, who have been agitating against the phenomenon of political interference and opposing merger of banks due to high NPAs. The employees are justified in their own right so far as the argument of high NPAs is not due to their working is concerned. Since this has been noted that most of the NPAs have accumulated due to various factors in the Indian economy some of them are internal and a few external. Some of these factors have contributed in the failure of the business ventures may not due to the wrong doing of the corporate houses. But a deep look inside the affairs of the corporate houses has to be made and course correction done at the earliest so that the public trust in the public sector banks is not lost and such a phenomenon can have suicidal impact on their financial health. It is also a public knowledge that majority of the NPAs have accumulated due to failure of projects in highways, coal, steel, power, distribution companies and electronics and they account for more than 86 percent of the total NPAs amounting to Rs 3.09 lakh crores are the share of the PSBs. The central government needs to have a re-look at all these factors and investments in these sectors and then proceed for making corrections including divesting in public sector organizations which have become loss making assets. But they also need to be investigated for what were the reasons for such huge losses.
Another important thing that has crept up at various conferences of the banks has been the professional management of the banks and their assets. Since they are trustees of the public wealth, the common masses have every right to know how the professional management can make a difference in managing their funds for the profit making course in the future so that losses can be curbed to a large extent. In fact, sight cannot be lost of the current situation wherein the government which has a major share in these banks keeps on appointing any person as their heads without taking into consideration the professional acumen of the candidates. Now in an expanding globalised world where professional proficiency is the merit, the government should desist from making appointments as per its whims and fancies. It will not be out of place to mention that their boards should also include people from specialized sectors so that they can advance their valuable suggestions and make their working more transparent for the shareholders and stakeholders to judge. The public trust has to be maintained with a high degree of professional management when much more needs to be done for efficient management of the resources and see to it that investment in non-productive and loss making sectors are not made to curb the NPAs. It is also to be borne in mind that highly professional expertise is needed to respond to the needs of the increased Indian economy working not only in traditional sectors but also in the new sectors, which will be making profits for the shareholders. Since only large corporate houses have made investments in the loss making sectors, an effort has to be made for meeting the demands of the common masses, who are asking for small term loans for their ventures. They can be saved from the cruel clutches of the money lenders in the hinterland by the banks, which can advance small time loans to them and have hardly contributed in accumulated NPAs. They are the real trustees of the banks and they need a better deal.



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