If government is
really interested to know the ongoing fraud in bank in sanction of high value
or low value loans for last two decades, CBI should first investigate the
wealth of retired CMD and current CMD, ED and all General Managers of all
public sector banks and try to compare the same with their total income earned
during their entire service. Then only CBI and GOI can assess the volume of
corruption rampant in this sector in the name of credit growth or achievement
of set targets or to please the politicians especially ministers who hold the
key of promotion of bank officers.
Unfortunately
Ministers are Godfather of all such corrupt officers who have spoilt the future
of banks. When the head of any institute is inefficient, inactive and corrupt, one cannot dream of good
governance and similarly when government is formed of corrupt ,inactive and ineffective ministers , one
cannot imagine of clean administration.
Until we get success
in getting rid of rampant flattery and bribery culture and until we stop
whimsical transfers and arbitrary promotions in all government offices and
public sector undertakings we cannot imagine of improvement of health of any
bank or any PSU or any government office. The culture of flattery is the root
of all maladies prevalent and rooted in the entire system.
Bank staff who are wondering in dreamland expecting wage hike of 20 or 30 percent should keep in mind that until they save banks from corrupt executives and corrupt officials they cannot expect earning high profit and when profit is low , banks cannot think of giving respectable wage hike.Politicians have spoilt banks by their dirty vote bank politics and when banks incur losses they will blame bank staff only.
Assets in banks will
continue to move from standard to Non performing assets and none can stop it
without changing the mindset of rulers. Now stress assets are reflected as 5 to
6 percent and it will move to 20 to 30 percent of total advances if the system is
not changed immediately. FM or RBI can prescribe hard dose of medicine but they
cannot yield fruitful result without the support of all involved in the process.
Dirty politics of vote bank has damaged not only the economy of the country but
badly affected the social harmony, regional harmony and communal harmony.
This is why why there is Free Fall of Indian rupee In Free Market despite all efforts made by learned FM, PM and RBI governor.Because the fall is not due to fault occurred in last few days or few months, it is the consequence of bad policies followed by team of economists ruling this country from Delhi. Similarly accumulated bad assets in public sector banks are not due to global recession or due to natural calamities, they are the bad consequences now precipitating due to bad policies and bad execution of good policies by bad officials sitting at top posts in these banks in nexus with corporate and politicians.
http://importantbankingnews.blogspot.in/2013/08/though-late-cbi-smells-fraud-in-rising.html
Until we get success
in getting rid of rampant flattery and bribery culture and until we stop
whimsical transfers and arbitrary promotions in all government offices and
public sector undertakings we cannot imagine of improvement of health of any
bank or any PSU or any government office. The culture of flattery is the root
of all maladies prevalent and rooted in the entire system.
Assets in banks will
continue to move from standard to Non performing assets and none can stop it
without changing the mindset of rulers. Now stress assets are reflected as 5 to
6 percent and it will move to 20 to 30 percent of total advances if the system is
not changed immediately. FM or RBI can prescribe hard dose of medicine but they
cannot yield fruitful result without the support of all involved in the process.
Dirty politics of vote bank has damaged not only the economy of the country but
badly affected the social harmony, regional harmony and communal harmony.
Loan defaults spark Rangarajan-Ranjit Sinha debate; CBI boss smells fraud in rising NPAs--ET 22nd August 2013
NEW DELHI: A plain-vanilla conference of PSU vigilance chiefs saw the unusual spectacle of two senior government officials openly disagreeing on the reason for the rising quantum of loan defaults.
While CBI Director Ranjit Sinha on Wednesday pitched for fixing criminal accountability of public sector bank officials in case of loan defaults, he was contradicted by veteran economist C Rangarajan, who pointed out that the rise in non-performing assets of banks could also be on account of the grim state of the economy rather than frauds.
Rangarajan, a former RBI governor and chairman of the Prime Minister's Economic Advisory Council, was the chief guest at the 5th Annual Conference of Central Vigilance Officers of government PSUs and officers from CBI on Wednesday.
"While judging the increase in NPAs, CBI must also take note of what is happening in the economy," Rangarajan sid.
Director invokes Mark Twain
...not all NPAs are attributable to suspect behaviour of those giving loans but many are also related to how the economy behaves," Rangarajan said.
The veteran policymaker was responding to remarks by Sinha, who in his opening remarks referred to the high amount of NPAs of public sector banks and said they were a cause for concern. NPAs, said the CBI director, had risen substantially in the last two years, from Rs 59,924 crore in 2010 to Rs 1,17,262 crore in 2012.
"The bulk of the NPAs is from the top 30 accounts, which is learnt to be running into thousands of crores. CBI has already initiated investigation or enquiries in some of the big defaulter accounts," Sinha revealed. He also said the amount involved in bank frauds had increased 324% in the last three years while large-value fraud cases involving amounts of Rs 50 crore and above had increased almost tenfold.
The CBI chief director also complained of "reluctance" on the part of banks to declare bad accounts as frauds despite there being clear-cut manifestation of malfeasance, saying this hampered probes by his organisation. "There is need to realise that the delay in reporting of a fraud will adversely affect the tracking and recovery of proceeds of crime as the initiative is lost due to delays. Another issue is the fixing of accountability of staff and there are often differences of opinion between CBI and banks regarding the role of public servants. In my view, there should be no reason for denial of sanction for prosecution wherever mala fide acts by delinquent officials caused huge losses to the bank. CVOs present here may please keep this in mind while examining CBI reports in future," he said.
While CBI Director Ranjit Sinha on Wednesday pitched for fixing criminal accountability of public sector bank officials in case of loan defaults, he was contradicted by veteran economist C Rangarajan, who pointed out that the rise in non-performing assets of banks could also be on account of the grim state of the economy rather than frauds.
Rangarajan, a former RBI governor and chairman of the Prime Minister's Economic Advisory Council, was the chief guest at the 5th Annual Conference of Central Vigilance Officers of government PSUs and officers from CBI on Wednesday.
"While judging the increase in NPAs, CBI must also take note of what is happening in the economy," Rangarajan sid.
Director invokes Mark Twain
...not all NPAs are attributable to suspect behaviour of those giving loans but many are also related to how the economy behaves," Rangarajan said.
The veteran policymaker was responding to remarks by Sinha, who in his opening remarks referred to the high amount of NPAs of public sector banks and said they were a cause for concern. NPAs, said the CBI director, had risen substantially in the last two years, from Rs 59,924 crore in 2010 to Rs 1,17,262 crore in 2012.
"The bulk of the NPAs is from the top 30 accounts, which is learnt to be running into thousands of crores. CBI has already initiated investigation or enquiries in some of the big defaulter accounts," Sinha revealed. He also said the amount involved in bank frauds had increased 324% in the last three years while large-value fraud cases involving amounts of Rs 50 crore and above had increased almost tenfold.
The CBI chief director also complained of "reluctance" on the part of banks to declare bad accounts as frauds despite there being clear-cut manifestation of malfeasance, saying this hampered probes by his organisation. "There is need to realise that the delay in reporting of a fraud will adversely affect the tracking and recovery of proceeds of crime as the initiative is lost due to delays. Another issue is the fixing of accountability of staff and there are often differences of opinion between CBI and banks regarding the role of public servants. In my view, there should be no reason for denial of sanction for prosecution wherever mala fide acts by delinquent officials caused huge losses to the bank. CVOs present here may please keep this in mind while examining CBI reports in future," he said.
Rangarajan, however, pointed out that a certain amount of "risk-taking" was inherent in the task of banking. "We should not completely eliminate risk-taking of banks. Loans may have been given based on certain growth projections, but the growth did not happen. So the causes and factors behind NPAs may be beyond the control of the banks and individual officers cannot be held responsible (in every case). You need to go behind the reasons for NPA... you will have to see if the act of officials was motivated for personal benefit. If it is so, the action must be punished but every NPA is not due to motivated actions of bank employees," he said.
The CBI director quoted Mark Twain to stress his point that timely criminal investigations into the cause of NPAs were the need of the hour. "A humorous definition of a banker in words of Mark Twain is: 'A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain'. If we see the figures of NPAs and number of high-value frauds, it seems to be raining quite heavily. The question is whether the bankers will be able to get their umbrellas back or not? And further, even if they get it, will it be in its original shape?" Sinha asked.
Rangarajan, however, cautioned that CBI had a "very delicate task" at hand while dealing with NPAs. "Banking system is based on two attributes - safety and soundness. Banks deal with other people's money, so it is important that this money remains safe but banks cannot offer extreme security, which may mean doing nothing with the deposits. Banking should hence be sound too, so banks should be able to earn," he said
The CBI director quoted Mark Twain to stress his point that timely criminal investigations into the cause of NPAs were the need of the hour. "A humorous definition of a banker in words of Mark Twain is: 'A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain'. If we see the figures of NPAs and number of high-value frauds, it seems to be raining quite heavily. The question is whether the bankers will be able to get their umbrellas back or not? And further, even if they get it, will it be in its original shape?" Sinha asked.
Rangarajan, however, cautioned that CBI had a "very delicate task" at hand while dealing with NPAs. "Banking system is based on two attributes - safety and soundness. Banks deal with other people's money, so it is important that this money remains safe but banks cannot offer extreme security, which may mean doing nothing with the deposits. Banking should hence be sound too, so banks should be able to earn," he said
http://economictimes.indiatimes.com/news/economy/finance/loan-defaults-spark-rangarajan-ranjit-sinha-debate-cbi-boss-smells-fraud-in-rising-npas/articleshow/21965998.cms?curpg=2
Banks may have to deal with higher NPAs due to economic slowdown: PMEAC
NEW DELHI, AUG 21:
Prime Minister’s key economic advisor C. Rangarajan today indicated that banks may have to deal with higher non-performing assets (NPAs) on account of poor economic performance.
“NPA also increases because of the way economy behaves. If the rise in bad loans is beyond the control of banks, then banks need to be very careful in identifying NPAs,” Rangarajan said.
He was speaking at the 5th Conference of Central Bureau of Investigation (CBI) officials and Central Vigilance Officials of public sector banks.
“While judging increasing NPAs, banks should also take note of what is happening in the environment. Some amount of loan can for a time become NPA,” Rangarajan added.
NPAs of banks have been going up for the past two years due to slowdown in the economy. Gross NPAs of some public sector banks, including State Bank of India and Punjab National Bank, have crossed 4 per cent of the total assets at the end of March 31, 2013.
Pulled down by the poor performance of farm, manufacturing and mining sectors, Indian economy slowed to 4.8 per cent growth rate in the January-March quarter of last fiscal year and fell to a decade’s low of 5 per cent for the entire 2012-13 fiscal.
Gross NPAs of public sector banks rose to Rs 1.76 lakh crore at the end of June quarter from Rs 1.55 lakh crore at March 31, 2013.
According to global rating agency Standard & Poor’s, India’s banking sector’s NPA ratio is likely to surge to 3.9 per cent of total loans in 2013-14 and to 4.4 per cent in 2014-15 compared with 3.4 per cent in fiscal 2012-13.
Recently, Minister of State for Finance Namo Narain Meena, in a written reply in the Rajya Sabha, said the NPAs of banks have shown a rising trend.
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