Creative accounting of banks at what cost?

The banks’ indulgence in creating mismatches between short term assets and liabilities by going in for high cost deposits without bothering about NIM is very common particularly in March to show an impressive performance  This results in liquidity risk and banks have to very often go for borrowings at high rates of interest. Further this sort of game plans of banks distort the very picture of balance sheet on any given date particularly at the end of financial  year and all the ratios may not reflect the exact position. Creative accounting pursued by banks is neither healthy nor  desirable for sound banking and it can expose the banks to some serious consequences especially when advances portfolio are not disciplined and NPAS are camouflaged by resorting to accounting juggleries. The assessment of Performance of banks and their MDs should be assessed based on January or February figures and not definitely March end figures. 

Dr.T.V.Gopalakrishnan

(This comment is furnished in response to MR K Sivaraman's article on mismatch between maturities of assets and liabilities appeared in Business line dated 15/413)