1. Vinod Rai’s first Bank Board meeting discusses public sector bank consolidation

Vinod Rai’s first Bank Board meeting discusses public sector bank consolidation

The Bank Board Bureau (BBB) on Monday held its first meeting in Mumbai and discussed consolidation of public sector banks (PSBs) and board-level appointments.

By: | Mumbai | Updated: April 9, 2016 11:22 AM

The Bank Board Bureau (BBB) on Monday held its first meeting in Mumbai and discussed consolidation of public sector banks (PSBs) and board-level appointments. However, details of the proceedings could not be immediately ascertained as all the attendees declined to comment.

The meeting was attended by minister of state for finance Jayant Sinha, Reserve Bank of India governor Raghuram Rajan, RBI deputy governors SS Mundra and R Gandhi, former CAG Vinod Rai, managing director of Omidyar Network India Advisors Roopa Kudva, former chairman of Bank of Baroda (BoB) Anil Khandelwal, former joint MD at ICICI Bank HN Sinor and secretary at the Department of Public Enterprises Ameising Luikham.

On Thursday, Sinha had said the Banks Board Bureau is expected to have its maiden meeting in the financial capital under the chairmanship of Vinod Rai to chart out the path of state-run banks’ consolidation and also fix timelines.

In February, Rai was appointed the first chairman of the Banks Board Bureau, which will advise the government on top-level appointments at public sector lenders and ways to address the bad loans problem among other issues.

In a statement, the government had said Prime Minister Narendra Modi approved the proposal of the Department of Financial Services for constitution of the Banks Board Bureau for a period of two years.

The bureau has been set up at a time when public sector banks are grappling with a huge problem of bad loans. The bureau was earlier proposed by the government as a body of eminent professionals and officials, which will replace the Appointments Board for appointment of whole time directors as well as non-executive chairman of PSBs. The bureau will search and select heads of public sector banks and help them develop strategies of capital raising.

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  1. Danendra Jain
    Apr 23, 2016 at 3:28 am
    Sri Vinod Rai is right in saying that all defaulters of bank loans are not wilful defaulter. But I would like to say that all defaulters are not due to global recession or domestic slowdown or due to natural calamities. Rather I may say here that more than three fourth of total Non Performing ets ( declared and hidden both ) are wilful defaulters or due to malicious intention of bankers, politicians and borrowers. Point is here how to discriminate avoidable default from unavoidable default. Important point is how to stop corruption in lending ,how to stop political exploitation of banks and how to stop ill-motivated , wrongful and malicious culture of wirting off of loan and sacrifice of considerably huge amount of good money in the name of one time settlement. It will not be an exaggeration to say here that majority of wirtten off loans and major portion of sacrificed amount of good money are to give relief to erring banking officials, to ill-motivated politicians and to save borrowers from harment in courts .It will not be inappropriate to say that during last two three decades , it has become habit or rather you may say it has become of culture of bankers to give credit to good or bad borrowers to serve self interest, to earn illegal gifts in cash or in kind, to achieve imposed target, to please higher bosses , to win the blessings of bosses and finally to get quicker promoton and to get choice posting .Same gang of corrupt officers apply their evil mind when the loan become Non-Performing ets (NPA) and it is they who hide bad accounts financed by them or their fellow colleagues for a few years on some plea or the other and finally either wirte off the loan or sacrifice a major portion of dues in One Time Settlement (OTS) . This happens with majority of NPA accounts, it may be small value or high value NPA. Small borrowers are freed from repayment in the name of poverty or failure of business of small borrowers and high valueborrowers are given relief in the name of economic recession or global slowdown or failure of project due to government fault, non-clearnce of statutory requirement or project cost escalation or some other imaginory untrue reasons. Staff accountability is not fixed in majority of cases to save erring officials or to help dirty politicians. Erring top officials use to get political patronage for their evil works and junior officers similarly get patronage from higher level officials. Evil culture in sanction of credit and in writting off of loans or in OTS has got wide psread acceptance at all levels of officials and in all governmnt department including Ministries. Employees who do not fall in line with whims and fancies of higher bosses and bosses who do not feel in line with whims and fancies of powerful politicians are posted at critical places and always rejected in promotion processes. Interview in promotion processes is such a tool which empowers interview takers to select or reject officer in promotion process strictly. As a result of this ill-treatment to good employees by higher bosses, good employees have made a habit of discarding promotion processes on false excuse of family or health ground. Senior and experienced loyal officers do not take part in promotion processes taking place in banks and on the other hand juniors who are expert in flattery and bribery apply for promotion and they get four or five promotions in 10 years. This has created an environment where juniors are king over seniors and experinced. Now you may well imagine what type of environment is prevailing in banking industry from top to bottom and what type of work culture and loyalty or flattery culture has been created during last three decades of liberlisation and freedom given to top officials of banks in the name of reforms. Here It is proper to say that Bank Boards Bureau (BBB) has been set up last year by present government to suggest names for top posts of the bank and to suggest ways to contain bad loans. I would like to say that BBB may appoint a good person as Chief of a bank but cannot change the intention of politicians who play a big role in making a bank sick and in spoiling work culture or loan culture or repayment culture in banking industry specailly Public Sector banks (PSU). It is political masters during rule of Congress Party or UPA or their Yesman officials in Finance Department who used to earn lacs and crores of rupees in making an officer of bank as ED or CMD of a bank. It is they who vitiated and polluted promotion culture during last three decades in the name of merit oriented promotion. Then ,it is these top officials who come through corrupt ways and by using dirty means do the same injustice when they decide fate of their suboridnates. Culture of bribery and blattery for getting promotion is deep rooted in PSU banks at all levels as it is in other government departments. As such Vinod Rai and BBB just by changing ED or CMD cannot change the decades old culture and atude of politicians as also that of Bank officers who in general are equally corrupt and addicted to evil culture and dirty practices injected in their mind by their evil bosses. Here it is proper to say that in seventies , say upto 1980 , bank employees used to get promotion strictly as per their seniority. During that period there used to be better loyalty and devotion to their banks coamared to what it is today in the name of merit oriented promotion processes and recruitment processes .During that period top officials of banks used to make excuse that they are helpless and they have to give promotion to all in order of seniority. When growth of banks used to below targeted level ,they in order to cover up their poor perfromance or conceal their evil work used to make excuse that they are constrained to handover sensitive work to inefficient persons . They used to make request to Ministry of Finance to give them power to make merit oriented promotion and recruitment policy overtaking Control of Trade Unin Leaders. When they got freedom to pick employees for promotion based on merit, they started ng up only flatterers and yesman and fully damaged the fundamentals of Human Resource of PSU banks. In India , power and absolute power is the root of all corruption. Powerful officers in general do not give value to performance , but give value to flattery and bribery , to caste and community and finally to give value to recommendation or VIP or amount of bribe they get in lieu of favour they do to an officer or a borrower.or a vendor. Former CAG and chairman of Bank Board Bureau Vinod Rai says that all defaulters are not wilful defaulters and that the cacophony of uninformed voices should not impact decision making process of bank executives.He says that the Banking sector has seen considerable stress in recent years , but we should not allow the cacophony of uninformed voices to debilitate the decision making capability of bank executives. I would like to say here that majority of hidden or declared defaulters are wilful defaulters. If he takes initiative to make srutiny of each account of anybranch of anybank, he will understand depth of evil culture, the volume of stressed ets still concealed in shining balance sheets of each bank. If he peeps into recruitment and promotion processes which took place during last three decades in a PSU bank, he will surely understand the depth of sickness , the quality of evil culture in banks , evil culture of politicians and evil culture of offcials of other daptments who are directly or indirectly ociated with credit processes , with recruitent and promotion processes and with processes related to buging other services through vrious vendors. Vinod Rai says that over estimation of defaults or punishment to dirty bank officials or punishment to dirty politicians, will adversely affect the lending culture. He says that bank officers will stop taking decisions and credit growth will be slowed down which will finally badly impact GDP growth. This logic is similar to excuses made by some fundamentalists and ill-motivated politicians who talk of danger to Islam when police officials arrests terrorists or supporters of terrorism. It is always said that Islam is in danger and it is alleged by self declared leaders of Muslim community that Muslims are wilfully and strategically hared by the government in power. If a Hindu terrorist or Dalit criminal is punished for evil their acts, people will blame police and the government that Governmnt is Anti-Hindu or Anti-Dalit. We donot want governmnt or Governmnt do not want to punish criminal in fear of erosion in vote bank. The consequence of this ill-motivated and emotional attack on administrative officers that law enforcing agencies are now afraid of taking action against Muslim or dalit or woman criminals .This culture send wrong message in the minds of law abiding citizens and they say openly that the government is made of criminals , run by criminals for the benefit of criminals .There are many states in the country or you may say in most of the states, police do not lodge First Information Report (FIR) when a victim approaches to compalin about a criminal. Law abiding citizens are afraid of police torture and criminals get full support from police officials . This culture of not putting crime in record register is prevalent in all police stations in the country. This dirty culture is deep rooted in most of police thanas and the state government claim that law and order situation of their state is very good . In this way , the state government do not need to punish crimials and xonerating criminals and by giving unjustified treatemtn to victims , they feel proud in telling people how crime graph has been contained and controlled by their leadership whereas the bitter truth is that criminal activities has been rising day by day in every state. Similarly every public sector bank is sick of bad ets. In my essment none of PSU bank is strong , very bank is weak . Only the difference is some of Chiefs of banks are clever in not reporting bad ets as bad ets whereas on the other hand Chiefs of some banks are honest enough to say spade a spade. Government of India says that some of weak banks are to be merged with stronger banks to make banks more effctive and productive. I think they are wondering in dreamland if Ministers and government officials or RBI officials think that some banks whose balance sheet appears to be shining are really strong from top to bottom. In fact , the culture of bad lending and ill-motivated write off and OTS with bad borrowers is prevalent equally in all PSU banks. And this habit is injected in the blood of past politicians. Bad lending and poor recovery of loans has become a normal and accepted practice in all banks fact borrower wilfully do not repay the dues in antition of write off of loan (small borrowers ) or in antition of some discount when they go for negotiated settlement with bankers under OTS. Quality of lending is not important as volume of lending is important for bankers, regulators and ruling party. Similarly for employees, interest of the bank is not important as it is important to take care of interest of higher bosses .This is why , so called strong banks like PNB, BOB, BOI,SBI, UBI , Canaran Bank have all face either losses or sharp erosion in their profits. Volume of bad ets in each bank is enormous and has reached a dangerous level. Vinod Rai will face Himalayan Task in containing stressed ets and in transforming and reforming sick banks in PUblic sector. He may succeed in getting reduced figure on NPA in declared balance sheet but he may not get same success in stopping the culture of bad lendng , culture of hiding bad loans on false excuses and then culture of writing off bad loans and sacrificing of bank's money in OTS giving false and unacceptable excuses.When some students fail due to poor performance in examination, politicians use to says that students are discouraged and school's name is tarnished when large number of students are declared fail. They say that teachers will be demotivated and in future , educated persons will not like to do the job of teaching. They say that if students are declared fail, they will stop study and sit in home or indulge in crime. Some ministers used to say that failing a student forces him or her to discard study or commit suicide or there is possibility of student attracted towards criminal activities. Perhaps this is why that past governemnt decided not to declare any student fail upto 12th standard.. In modern era , every school management have become very much clever that they give more than 75% marks to more than 95% of students. They conduct easy and objective type question based examinations and help students in ping examination by fair or unfair means. In olden days, students had to study hard for securing even 60% marks. Students gettig a score of 60% and above used to more brilliant and intelligent. Now a days even students scoring more than 95% marks are rejected in various ALl India compeive examinations taking place for higher education or for job. Similarly management of PSU banks is very much clever, they do not like to put any bad advance in NPA catgory . If any officer has to decalre a bad account as NPA , he has to seek verbal concurrence from higher officials. Even auditors and inspecting officials do not have courage or will to say bad account as bad . Keeping boss happy and in good mood is the target of all juniors and to earn costly gifts is the target of Chartered Accountants who certify the good health of a branch or a bank.Vinod Rai should not be astonished to know that every branch is victim of bribe based lending and wrongful concealment culture for hiding bad loan and saving provisons to get quick promotion and to win the blessings of top bosses. He will soon understand that majority of officers in banks are loyal to their bosses and not to the organisation they serve and the bank from where they earn ther bread and butter. Officers engaged in loan processing earn more from illegal means than from ry in legal way. Vinod Rai is right in saying that all lending cannot be termed as criminal and cannot be tegged as done with malicious intention. It is true . But it is also true that major chunk of lending is based on bribe and or based on recommendation of some higher officials or some powerful politiicians. Some of our ruling politicians thinks that if erring officials are punished, employees in general will avoid taking risk. I would like to mention here speed of recovery has geared up in almost all banks oly by announcement by Prime Minister Mr. Narndra Modi , Finance Minister Mr. Arun Jaitley and RBI Goveernor Mr. Raghuram Rajan that verynpie will be recovered from wilfull defaulters of bank loans. In the past , Miisters used to be pro-defaulters and against those who used to abide by laws, rules and guidelines.Lacs of accidents take place in the country everyday. Many accidents take place due to rash driving, due to stuntful driving, due to driving after drinking wine, due to immature driving, due to poor traffic control mechanism . There are many genuine instances where police actions are needed to take punitive actions against persons who are found to be involved in faulty driving or when traffic rules are violated or when roads are not properly and timely repaired or due to mismangement of law enforcing agencies or deficiency in laws and guidelines or loops in execution of policies and so on. But if some of clever politicians plead that if police take action against erring drivers, people will stop driving and stop using vehicles, it is their mental bankcrupcy and lack of understanding of ground reality why number of accidents are increasing day by day.Vinod Rai may be right in saying that he will think on raising package of executives of PSU banks to make it at par with that of private banks. Vinod Rai is however in wrong impression that executives will not indulge in corrupt activites and become truely loal to their organisation if their package is raised . If it is so that why junior employees who process the loan proposal should not expect hike in their pay. Moreover , I would like to mention here that average pay of PSU bank employees is almost same as that of private banks. It is only mismanagement of Human resource and wrongful deployment of Human Resource that PSU banks are havig huge load of bad debts and suffering continuous erosion in their profitability whereas on the other hand private banks are booking higher and higher profit and lower and lower under the same economic environment.I therefore feel that the government is in wrong impression if it thinks that by raising package of executives of PSU banks, they will be able to transform and reform the health and productivity of banks . If package is so much important, I would like to say here that in seventies and eighties, it used to be said that teaching in government run schools and colleges is very poor only because teachig staff are poorly paid in government schools compared to that in private schools. Since 1981 , Government has given huge jump in ry packages of teaching staff in government schools and colleges and their pay is now many times more than their counter parts in private schools and colleges. Still , none of parents want their children to be admitted in government schools and colleges and they strive hard to put their child in private reputed schools even if they have to pay higher tuition fee and pay considerably good amount of donations . Teachers in goveernment schools do not bother for study of students even though their package is multiplied many times. They want that students opt for private tuition and coaching cles and they can earn lacs of rupees through such acts in addition to regualr ry they get from the government.Similarly none of the guardians and care takers like their family members patients to be admitted in Government run hospitals for treatment. People in general want that in case of sickness , they are treated in private nursing homes even if they have to pay charges many more times than what they are needed to pay at governmnt hospitals for treatmnt. Because they know very well that patient will not come back alive if he is admitted in government hospitals. Poorest of poor also try best to be treated in private hospitals. The reason is knwn to all and it is no more a secret . Politicians during last seven decades have looted this country and looted common men on all matters . They divide people on caste or communal ground, they fight based on region or religion, they provoke emotions for vote bank and cause riots, they cry for reservation for some group or the other , but they never try to perform for the real benefit of common men who voted them to power. Similarly banks have been used by politicians for enrishing their vote banks only. Mr. Janardahan Pujari of Congress Party used to cr for loan Mela, Mr. Devi Lal , V. P. Singh and Mr. Chidambram like politicians propagated and promted loan waivr culture. They in general use banks to support their followers, their families and friends and to empower their political winnability in election. Unfortunately none of them could ensure permanent victory for them .

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