Sunday, June 1, 2014

Window Dressing of BS to bring down NPAs in March

Unless there is a trade off betwen Banks management and Audtors, the NPAs of banks cannot improve in March as nothing has changed either in the economy or in banks.If at all there is some improvement it may be that, more loan accounts would have been restructured or more write offs would have been effected or fresh loans would have been released to evergreen the accounts to keep the NPAs down, Generally banks resort to window dressing of balance sheet and Profit and Loss account in March and they arrive at some presentable figures in respect of NPAs, profit, deposits and advances. This is done with the full knowledge of top management of banks and auditors seldom object to it. March end figures should never be taken as a criteria to assess the performance of banks as long as Auditors and Top management act hand in glove with each other.

Dr.T.V.Gopalakrishnan

(This comment appeared in Business Line dated 20/14).
 

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