Which Bank Is First In NPA ?

It is reported in newspaper Today that United Bank of India has been placed at Top in the list of banks having more stressed assets compared to their total advances and in comparison to private banks

If a person read news about banks regularly , he is aware that banks like State Bank of India, Punjab National Bank, Bank of Baroda, Bank of India, Union Bank, Oriental bank , Corporation Bank are considered as stronger banks whereas banks like United Bank of India, Central Bank of India , Uco bank, Indian Bank, Dena Bank, Vijya Bank Punjab & Sindh Bank Bank of Maharastra are considered as weaker bank. Even two to three decades ago, banks like United Bank of India, UCo Bank, Indian banks were considered as weak bank and were on the verge of merger with so called stronger banks.

Government of India has been making promising year after year and quarter after quarter that health of public sector banks is good and regulating agencies like RBI and Ministry of Finance is closely watching the performance of these banks. As a matter of fact , actual health of these banks never improved by virtue of any change in policy or change in controlling offices. It is the art of manipulation which helps some banks to show good performance in some quarters and bad performance in some other quarters. Some of Chiefs are purely looters and some are less looters. Some banks have been exploited by politicians to greater extent and some are to lesser extent due to some reason or the other. Some of Chief are blind flatterer of Ministers and some are less Yesman. In fact there is no improvement in work culture and no change in attitude of politicians in using bank for vote purpose.

 

Unfortunately , Government of India has never taken any step to improve the health of PSU banks. On the contrary , ruling party has always tried to exploit these banks for political advantage. Sometimes they prescribe Loan Mela for growth of bank and sometimes they build pressure for write off of bad loans. Sometimes they build pressure on banks for priority sector lending and sometimes for lending for growth in infrastructure in the country. Sometimes the prescribe brainless expansion of branch network or ATM network and sometimes they ask for opening of accounts or doing insurance business.

It is they who have damaged the banking culture from grass root level and injected corruption and malpractices in PSU banks. It is they who use banks to garner votes and then it is they only who accuse banks for lesser profit compared to banks. When Financials of PSU banks reflect signs of weakness compared to peer private banks, they prescribe certain change in policy or change in Chief of banks, but dirty culture of exploitation of bank never stops.

Due to continuous exploitation of PSU banks by politicians , health of these banks have consistently moved from good to bad and bad to worse. GOI has to provide capital support from time to time. Even then the health of banks do not appear to be improving, rather it is deteriorating quarter after quarter. Volume of stressed assets in weakest bank United Bank is reported to be 21.5% and that in strongest bank SBI is more than 15%. This is the statistics which is published by these banks and which is accepted by RBI too.

If correct assessment of quality of assets of all PSU banks is done by an unbiased agency without any fear of repercussion or punitive action, I am very much sure that volume of stressed assets will be around 50 percent of total advances or approaching it.

And the matter of concern is that no concrete step has been taken by any agency to stop this uptrend in stressed assets. Quality of lending has not improved. Quality of workforce promoted to higher level is not based on ability to perform or based on seniority and experience but purely based on flattery and bribery. Similarly quality of recruitment in PSU banks has faced erosion year after year during the regime of reformation launched since 1991. So called merit oriented promotion policy or recruitment set up has failed to ensure merit at any level, rather it has promoted demerit. 

Obviously , on the one hand banks are appearing to recover bad loan , on the other they are adding many more times of it as new bad loan. They are unable to control loss caused by frauds and stressed assets. It is all because neither management of banks are honestly doing corrective and reformative work, nor are government officials or ministers taking any concrete step to stop further deterioration in quality of assets and quality of work force.

Unless and until there is change in culture and mindset of people who work in bank and who monitor and regulate them ,there is no hope for improvement in health of ailing PSU banks. GOI will have to decide whether banks are to be used as tool to fulfil social objective or to be left free to earn profit and profit only. Similarly , bank officials have to decide whether they are meant to serve their organisation or they are to served their bosses and bosses only.

Courtesy   jaindanendra