Directors, Banks and NPAs

The author has brought out in detail the the reasons behind the malfunctiong of banks and corporates due to wrong selection of Directors, Auditors and professionals. Banks have Directors from the Government and RBI and they can be easily silenced by the Chairman in case they raise any objections to the proposals mooted by the Chairman. One inspecting official after inspecting a nationalised bank observed that the government director is in his Shirt Pocket and the RBI director is in his pant pocket and other directors are not in his thoughts even. The appointment of Direcors is erratic and less said the better the appointment of auditors. There is always some trade off between the Chairman and Directors and between the Directors and auditors.The bank has umpteen ways of hiding NPAs whether the system permits or manual intervention permits. There are abinitio NPAs sanctioned by the Chairman and with the Connivance of the Directors,potential NPAs, hidden NPAs , camouflaged NPAs, and disclosed NPAs. The NPAs of banks particularly the United Bank of India under discussion are only disclosed NPAS and other categories if added it would be another 50% more.No seriouys attempt is made either by the RBI or theGovernment or the Chamber of Commerce or  the depositors, or the disciplined borrowers or the shareholders of banks to really find a lasting solution to minimise the imapct of NPAs in banks books. There should be some mechanism to prevent formation of NPAs right from the date of sanctioning of loans and this can be done only by the banks and borrowers cooperation and coordination. Will someone care for such a practical approach.  

Comment given to Money Life.