All
these write off of loans running into thousands of crores of rupees are
borne by the tax payers, depositors, share holders ,general customers employees
and good and honest borrowers of banks. Though there is an inbuilt solution to
contain formation of bad debts and discipline borrowers, banks, auditors
and accountants and make the borrowers and banks to bear the cost of write
offs without passing on to tax payers and other stake holders, there is
reluctance and resistance to attempt the solution on a trial basis from
all corners. Both theRBI and Govt also
talk and express their concern on the staggering NPAs and loss to the
exchequer, but what prevents them to introduce an inbuilt mechanism to
bring under control the NPAs and discipline the recalcitrant borrowers is
something strange. If the solution suggested by this author in
early 2000s had been implemented, this write offs could have been avoided
and banks balance sheets would have been much stronger today. The
suggestion developed as a statistical model and found workable has been
published as a book titled Management of Non Performing Assets with a
Foreword by the Chairman PMEAC. This model had been suggested to be
published by the Foreign Examiners who had approved the Phd thesis
with the remark that the model is worth a trial in Indian scenario. The
benefits of savings on account of write offs if the suggestion had
been implemented could have been passed on to depositors by offering them
a higher rate of return, borrowers by granting reduction of interest
rates, and share holders who include the Govt in case of PSBs a better rate of dividend, tax
payers some benefits through improved GDP growth and reduced tax rates. Are
the authorities waiting for Supreme Court to intervene in managing
banks balance sheets ?
Dr.T.V.Gopalakrishnan
(This
comment is in response to an Article Govt Banks write offs Rs 15000 crores
appeared in Times of India dated 13/05/13 A modified version of
this comment has also been published in TOI.).
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