Bad debts in banks , a creation by the authorities.

The loot through banks has been going on since the days of nationalisation. The write offs, interest concssions, and compromise settlements are the easiest routes to take depositors money from banks and they are made good by reducing the rate of interests to depositors , avoiding or minimising dividend payments to share holders who include the government and by tapping the budgetary resources ie tax payers money. Appointments to banks are as per the whims and fancies of the Government and RBI though know the wrong doings in banks has no option but to please the Government as dictated by the Government nominees both in RBI and the Banks. RBI has no autonomy is a known fact and it has always been functioning as per the directives of the Government . It gets oral instructions and messages through press reports. It has to act knowing the mindset of the Government in power. Even the pension updation has been stopped by an oral instruction ignoring the written agreement entered into between the Government and RBI to provide pension on par with Central government pension. Fudging of balance sheets of banks has been an accepted practice for decades and window dressing of balance sheets to suit the management to hoodwink the regulator and the Government has been going on with the full knowledge of the management, RBI and the Government. It suits all well and the ultimate result of all wrong doings is that the menace of NPAs unfortunately has touched beyond any treatment and is at the explosion level. These are all disclosed NPAs and hidden NPAs will be almost equal to the diclosed ones. Now the entire attention is on banks and their NPAs and the solution is to write off using tax payers ' money as they cannot question the Government. The balance sheets need to strengthened and the only way is to induct more money to cover up the write offs.Rob Peter to pay paul who has already been robbed is a mild expression so to say as far as banking is concerened. The article should be an eye opener and should enable the authorities to introspect the damages they have done to the banking system, the economy and the tax payers because of their lapses, lack of professionalism  and indulging in business with ethical deficit. Discipline is the essence of banking business and the more it deviates from financial discipline in particular,  more the damage it inflicts on all stake holders. The disease of bad debts is worse than cancer and it cannot be endured  for long with all the supporting system. Prevention is always the best cure and any expenditure to prevent the disease is worth spending.

      

Dr T V Gopalakrishnan