No doubt transparency in respect of large borrowal accounts in particular will prove to be a remedy in making them performing assets in banks books. When large projects get cleared and loans are sanctined the terms andd conditions of sanction, how the projects got cleared, whether they are socially desirable, technologically feasible, economically viable and financially sound need to be made transparent. The men behind the projects,their competence, their track record and thier involvement and commitment in terms of Financial Contribution etc should be made known. The creativity if any in accounting practices generally resorted to by large Companies in manipulating and inflating the Contribution by the promoters needs to be highlighted and nipped in the bud itself.The details should be highlighted when such companies go for an IPO and raise capital. The SEBI also has to play a crucial role in disciplining the borrowers. The way the borrowers conduct the bank accounts needs to be independently verified by the SEBI and certified in their Balance sheets. Banks rating and banks qualification of the accounts if any need to be made transparent in the Balance sheets of Companies. The need to bring down NPAs in banks books and disciplining the borrowers and banks to ensure a sound and healthy banking is very crucial and the transparency of the details can definitely improve the performance of both banks and borrowers. Any mischiefs played by any Board Members of both banks and borrowers can also be minimised through the process of transparency. This article isa pointer to that effect.
Dr T.V.Gopalakrishnan
(This comment is in response to an Article Transparency can be a cure that appeared in Business Standard dated 22/9/14)
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