Financial Discipline and ethical deficit cannot go together.

Lasting Solution to NPAs

The only solution to Bad loans in banks is to Prevent Formation of bad loans than to find ways and means to recover the bad loans by spending more than the loans themselves involving tax payers’ money. Now what is identified as bad loans needs to be frozen and recovered by enforcing the existing laws of the land without any fear or favor and bringing in the Bankruptcy Code at the earliest. Loans turn bad because of several reasons and the major reason is the non professional approach of banks to favor the unqualified borrowers and encourage them ignoring the basic principles of lending and disciplining them from the day the loans are sanctioned. Instead of the suggested proposal to have a Stressed   Fund by the Ministry of Finance and the RBI,  is it not  ideal to have a Stressed Assets Prevention Fund by levying a penalty both from the erring banks and borrowers minimise generation of bad debts and liquidate the bad debts in case formed by the banks and the borrwers themselves without disturbing the other stakeholderrs?  This fund over a period would be more than the generation of bad loans and would be helpful to liquidate the bad loans without affecting the budgetary resources and depositors’ interests. The solution in the long run should be to discipline the borrowers, educate them to run the business on professional lines with ethics and make the banks also accountable and sensitive to the trusts and responsibilities vested in them. In this regard the practical solution suggested in one of the books Viz Management of Non Performing Loans in Public Sector banks  published by the Indian Institution of Banking and Finance way back in 2004 can bring in discipline among the borrowers and banks as well and find the required funds to liquidate the bad bebts without taxing the tax payers and depositors. The very acceptance of the solution eludes even the debatable stage despite having it been widely circulated among the top bankers , RBI and the Finance Ministry is a mystery.The bad debts accummulate due to ethical deficit among other things  is a fact which cannot be ignored any more  and the solution lies only in effective Governace.    

 Dr T V Gopalakrishnan        

What to expect from the Budget.

Tinkering approach to budget should go. The budget should contain policies to enhance the revenue collection without any leakage, raise funds from market through disinvestment without pricing greedily and incurring the displeasure of investors, ensure to reach the subsidies only to intended beneficiaries, contain fiscal deficit from taxes earned out of growth of the economy taking advantage of reduction in oil and gold prices, removing the flab observed in various segments, enhancing the production and supply without any deficiencies and leakages, improving the data collection on employment, poverty,, inflation, services, etc. The Over all governance standards have not improved is a fact and it needs to be fixed through social audit and public participation. The gap between what we are capable of achieving and what we really achieve needs to be identified and fixed appropriately through budget provisions.The budget should ensure to fix tax evaders by fradulent accounting practices pursued, insisting cash payments without issue of recipts mostly by professionals, brokers traders, business establishments .etc, People should have facility to report suspected tax evasion freely.There are mushroom growth of different types of clubs in and around major cities and they are nothing but illegal establishments to nurtuire black money generation and spread of wealth in a manner not acceptable to the society.  

Dr T V Gopalakrishnan

Have a humane approach to all.

It is really unfortunate that the Bureaucrats have stopped the updation of pension in RBI without any rationale The action on the part of bureaucrats  ignoring the agreement entered into between  the bank and employees association way back in 1990  with the full consent of the Government and also the spirit behind the decisions given by the Supreme Court in the matter of pension in respect of various cases,cannot stand justice and any ethics.  The right to live in dignity after serving an organisation for three or four decades and that too without depending on anybody for financial support by the organisation to provide pension  to its retired officials  is being denied by the Government without any rhyme or reason when the Government preaches welfare for all and equity and justice for all human beings. Taking away the benefits already enjoyed  without caring for the  ever increasing  cost of  living and the old age problems of  hapless senior citizens  has no justification what so ever.  Hope wiser counsel will prevail and pension updation is effected at the earliest. 

Dr T V Gopalakrishnan