Deafulters, banks and RBI

This is an important topic the author has dealt with. The bad loans of the banks are nothing but a decent way of organised loot is a fact known to all in the knowledgeable circle in money banking and finance. No excuse in keeping large and willful defaulters in banks books, when there is a built in mechanism to solve the problem and the statistical model developed through research, approved by veterans in the field and made available in the book form is completely ignored even without a debate though the solution has been recommended for a trial by the examiner of the thesis way back in2003.  The details of this thesis published as a book carrying the preface from none other than Chairman, PMEAC can be had from internet through google search by just typing Management of Non Performing Advances. This solution was presented in several seminars attended by Corporates, Chairman of banks and academics and several articles and letters had been written in all leading commercial dailies. A glance through the blog econo-reflexions.blogspot.com will be sufficient to get an idea of the efforts put in to have a debate on the solution offered. Unless and until an inbuilt mechanism is introduced to discipline both borrowers and bankers, the problem of defaulters will continue to haunt the banking system. This is not an insurmountable issue, but authorities, banks and borrowers have an aversion to introduce a lasting solution to contain formation of NPAs The borrowers and banks enjoy some known and unknown benefits by having NPAs in the books and the authorities keep a blind eye to the problem The unfortunate part of this is that the depositors, good borrowers, shareholders and general tax paying public bear the brunt and hence defaulters have no concern. “There is salve for every sore.” Provided there is a will.

Dr.T.V.Gopalakrishnan

(This comment is in response to an article that apperaed in Times of India dated 7/7/13.)