1. Bad loan situation not alarming, banks will resolve issue: Vinod Rai

Bad loan situation not alarming, banks will resolve issue: Vinod Rai

Emphasising that the bad loan situation is not alarming, Banks Board Bureau chief Vinod Rai today said all public-sector banks have got their strategies in place to tackle the stressed asset woes.

By: | New Delhi | Published: May 13, 2016 8:54 PM
Emphasising that the bad loan situation is not alarming, Banks Board Bureau chief Vinod Rai today said all public-sector banks have got their strategies in place to tackle the stressed asset woes. (Express Photo) Emphasising that the bad loan situation is not alarming, Banks Board Bureau chief Vinod Rai today said all public-sector banks have got their strategies in place to tackle the stressed asset woes. (Express Photo)

Emphasising that the bad loan situation is not alarming, Banks Board Bureau chief Vinod Rai today said all public-sector banks have got their strategies in place to tackle the stressed asset woes.

“All of them are suffering from stressed assets. They are across infrastructure sectors. But each bank has a strategy to resolve which would be different from every other bank. That is what we discussed,” he said after a day-long meeting with heads of PSU banks here.

Asked if the NPA situation of banks has reached an alarming level, he said, “it is not and banks will come out of this”.

Gross NPAs of PSBs rose from Rs 2,67,065 lakh crore in March 2015 to Rs 3,61,731 lakh crore in December 2015.

Asked if the PSU banks would need more than Rs 25,000 crore capital infusion budgeted for the current fiscal, Rai said, it will be decided only after the banks declare their fourth quarter results.

“The results are being declared now, audit is going on. Only after that the government will take a view on how much is to be infused,” he said.

On consolidation, Rai said all those issues are secondary and no such proposal has come.

“Just now it is the question of trying to resolve the assets and trying to ensure any vacancies which exist get filled up so we are working towards that. Consolidation and all that is being discussed. It is work in progress,” he said.

With regard to stake sale in IDBI Bank, he said, it could happen in less than six months but this issue is not looked at by the BBB.

The government in December gave approval to IDBI Bank for raising Rs 3,771 crore during the year, by way of Qualified Institutional Placement (QIP), a move which will dilute its holding by about 26 per cent in the lender.

The government’s holding in the bank stands at 80.16 per cent.

With regard to credit push, he said, each bank has created a strategy on how they will address their lending issues.

The Bureau was constituted earlier this year to help government select heads of public sector banks and financial institutions and assist banks in developing strategies with regard to capital raising and consolidation.

Besides Chairman, the Bureau has three ex-officio members and an equal number of expert members.

Expert members are ICICI Bank’s former joint MD H N Sinor, Bank of Baroda’s former CMD Anil K Khandelwal and rating agency Crisil’s ex-chief Rupa Kudwa.

Its ex-officio members are Secretary, Department of Public Enterprises, Financial Services Secretary and RBI Deputy Governor.

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  1. Bhogendra Thakur
    May 14, 2016 at 3:10 am
    He is in habit of sensationalizing things. This time he has job to douse the fire. Let us see how he does in his new role. Modi has already rewarded him for his previous work.
    1. Danendra Jain
      May 14, 2016 at 10:25 am
      Sri Vinod Rai and his team in Bank Board Bureau (BBB) appear to be trying for cleaning balance sheet of public sector banks in particular and banks in general. RBI Governor Mr. Raghuram Rajan has also been engaged in cleaning of finacials of PSU banks for last two years. Prior to that Mr. Suba Rao also tried a lot to clean Balance sheet of PSU banks. Mr. Arun Jaitley Finance Minister and Mr. Jayant Sinha Dy Finance Minister are also sincerely trying their best to improve health of banks. Mr. P Chidambram and Mr. Pranab Mukherjee also appeared to think of best for banks. But the fact is that no improvement has actually taken place at ground level during last three decades in culture of lending , in position of recovery and in habit of negligence in monitoring in PSU banks. Situation has rather been deteriorating year after after. Top ranked Officers who are clever in maniting balance sheet come out with shining balance sheet and get elevation through their mentor Ministers and RBI officials. But sooner or the later, in some quarter or the other , each bank has to book bad results and make false promises that they will deal with problems and try to reduce stressed ets in forthcoming quarters. In fact ,Officials are in general busy in falsely glorifying their bosses. A Branch Manager glorifies a Regional Head, RH glorify Zonal Head , General Managers glorify ED and CMD and finally CMDs are busy in glorifying Finance Ministers and RBI officials. Most of them are est Yesman than real performers. They are good speakers to hypnotise ministers and bank staff both. They are more loyal to their sources of wealth and power than to their bank.Bank Officials take care of their bosses more than thier banks. They are loyal to their bosses and their clients who make them richer and powerful . They in general do not take care of quality of loans they disburse and do not bother of monitoring loans sanctioned by their prdecessors or in matter of recovery of dues from bank loan defaulters. They are more often than not, busy in extending red carpet welcome to their bosses, their CMD, ED and other senior officials to earn their blessings, to cover up their evil works in lending and finally to get quickest promotion and choice transfers . They learn the art of gifting and polishing auditors for getting a certificate of good health of loan accounts in their bank.Officals who are not apt in flattery and not expert in earning bribe are languishing in insignificant and critical places . Inefficient officials in general are ruling over efficient officials. Inexperienced are ruling over experiened ofgicers. Majority of branches of each Bank is headed by either corrupt officers or inefficient officials or these branches are facing acute shortage of staff or they are working under prssure of higher bosses or local mafiamen. It is always easier for them to compromise quality to survive in the corrupt system than to ert their knowledge and values.Politicians are busy in boosting up credit growth in all banks by hook or by crook. They want to see rise in credit figures and they are least bothered whether the loans disbursed are going in the hands of good borrowers or bad borrowers. They are not aware whether considerable chunk of loan amount is distributed in officials, middlemen, CAs and political leaders. Poltiicans in general want to gain political advantage by announcing one after other loan disbursal schemes and loan waiver schemes . They want that each bank and each branch disburse loans and achieve the imposed target .They make new schemes year after year and allow open loot in the name of achievement of targets fixed for various schemes. Quality is not their headache. They care for reserved and not for deserved. Politicians are not going to understand that every area and every town is not blessed with same potential for growth. They do not agree that each officer of bank do not have same quality and same knowledge. They do not understand that process of loan sanction is a time consuming process in the same way as it is developing love with opposite . They are not ready to accept that understanding credentials of loan seekers is not everybody' s cake.In such situation and in such an environment where majority of officials from top to bottom are busy in flattery and bribery , where administrative and judicial officers are inefficient and corrupt and where politicians are crazy for enrichment of their vote bank , learned , intelligent and talented Sri Vinod Rai cannot hope for success in real cleaning of balance sheet , neither of PSU banks nor that of private banks. There is however no doubt in honest, integrity, sincerity and loyalty of Sri Vinod Rai.It is remarkable here to say that it is lastly people of India who will have to face the brunt of falling and ailing banks . It is they who will get lesser interest and lesser dividend on their investment in these banks . On the contrary bad borrowers will get more and more loans at lower and lower interest and more and more discount when their loan account is considered as Non Performing et by lending bank. Bad borrowers will get more acceptance and good enterpreneurs will face so many hurdles in getting loans from banks .Dream of better GDP growth will get shattered in hands of evil minded care takers.Vinod Rai and his team and Finance Ministers Mr. Arun Jaitley appears to be convinced that health of banks is not alarming . They are too much positive minded or they are inclined to appear to be positive minded to save country's image and ratings. They appear to be busy in dealing with bad ets of banks, but in fact slippages increases faster than upgradation of bad ets almost in all banks . Some banks are considered strong banks in their opinion and some other are weaker in comparision. But their ideas and perception about a bank will continue to change and fluctuate from quarter to quarter. Some time bank 'A' will appear to be strong and some other time same bank 'A' will look like weaker.I howevr observe that banks like PNB, BOB, IOB, OBC, SBI which were considered as strong banks are having the highest volume of bad ets concealed with the help of technology and several tools of restructuring and evergreening and it is their cleverness that they are exosing their bad debts in slow and gradual manner. Banks which were considered weak two to three decades ago are still weak and their weakness has grown in valuecand volume . No sign of improvement is visible in real sense though government has been making efforts for more than three decades. Fact is that each and every PSU bank is weak and their weakness have been growing relentlessly. Only point to be appreciated is that they are expert in hiding or exposing bad debts. It is completely their whims and fancies which works in taking decision on helath of a loan account. If they like they can conceal a bad accounts for years and treat it as Standard et . When their evil works goes beyond control or when some of recalcitrant auditors or some of media men expose the hollowness of a company , these bank officials decides to treat a bad et as bad et. None of junior officers otherwise have courage to say spade a spade. Window dressing in deposits, advances and recognition of bad ets has become the deep rooted culture in all banks and regulating agncies have no option other than to accept the inflated , manited and fabricated figures. There are many lames excuses like economic recession, global slowdown and natural hurdles to save their skins.Government will have to do a lot of hard work for years and decades to get rid of sins of past officials and past politiicians who silently and brilliantly looted banks for their self interest and to gain in wealth and power for decades . It is not as easy to clean them as Mr. Vinod Rai and Mr. Arun Jaitley appear to visualise.It will take very long period in real cleaning of banks and changing of deep rooted culture of bankers and politicians because still GOI and BBB are collecting opinion and views of those officials and politicians who promoted loot and evil culture of flattery and bribery . Thieves and looters cannot disclose their evil ideas to police . They can be good speakers and expert in flattery to bosses . They can be master in managing bosses . But they cannot give valuable ideas which may translate into real transformation and reformation in health of banks. For real change, Vinod Rai will have to work personally for a bank for years and then only he will be in a position to understnad ground reality. It is easy to make good policies but it is difficult to execute them in true spirit.Public sector banks that declared their results till date in general reported quarterly losses. or sharp erosion in profit , as non performing ets (NPAs) continued to pile on after the Reserve Bank of India's (RBI) et quality review (AQR). Bank of Baroda, Central Bank of India , Allahabad bank, UCO Bank and Dena Bank reported a loss for the second consecutive quarter. Union Bank of India was the only exception reporting a small net profit in the quarter ended March 2016, though down 78% from a year ago. Bank of Maharashtra and Vijya Bank also reported little profit.In near future , we will witness more devastating results from other public sector banks. Hollowness of so called strong banks will also be exposed, if they truely stick to strict prudential norms fixed by RBI for identification of ets and for income recognition. Biggest bank is said to be SBI. I hope sooner or the later this bank will also tell the truth of bank . A day will come when FM and PM as also BBB will accept the truth and then they will take more effective steps to brighten future of banks. I have full faith in leadership, caliber and talent of Mr Narendra Modi Prime Minister of India and his team ociated with the task of cleaning these banks. I have full faith in ability , knowledge,potential and capability of sri Raghuram Rajan rbi governor. I hope ,sooner or the later, thing will improve because they all are sincerely working on it.

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