Practical Solution to Contain Formation of Non- Performing Advances in Banks

Respected Honourable PM Sir,

Sub:  Practical Solution to Contain Formation of Non- Performing Advances in Banks 

At the outset I request you to kindly excuse me in addressing a letter direct to you, as I have been approaching the authorities out of love for the nation to introduce a built in mechanism to contain the formation / prevention of Non performing loans in banks and the response has been lukewarm despite the menace of bad loans destroying the banks and weakening the economy affecting all its stake holders including the Government, the tax payers and depositors of banks.

In this context, I enclose a book “Management of Non Performing Advances” authored by me based on the Ph d thesis that I did and  well appreciated by the examiners for its lucid style of writing and containing a practical solution to the festering menace of NPAs faced by the banks and suffered by the economy perennially. The Examiner has even commented that some of the suggestions of the Researcher will have policy implications and if implemented will give far reaching good results both to the public sector banks as well as to the economy. It is also added that the simple statistical model suggested by the researcher can be given a fair trial. The book carries a Foreword from Dr C Rangarajan former Governor of RBI and  former Chairman Prime Ministers Economic Advisory Council to the former PM..  

I have been very closely following you and your strenuous efforts to take the economy forward with a wonderful vision for the nation to excel in the world with peace, welfare, safety, security and solid economic progress. The strong growth of the economy is dependent on the strong financial system of which the banking system is the nerve centre and its inherent weakness cannot and should not be allowed to come in the way of your mission and great vision. That the banking system is strong but not healthy is a fact and it suffers from certain man made deficiencies which can and need to be set right in the interest of the economy and its people. In this regard, I am tempted to quote Mr Atal Bihari Vajpayee our former Prime Minister “We cannot allow peoples faith in economic liberalization to be shaken by those who do business with an ethical deficit.”           

I send this book not for my personal recognition or some benefit .The efforts put on in bringing out a lasting solution to the problems arising out of Non performing advances should not go waste. I strongly feel that had the solution suggested in 2004 been implemented, the banking system now would have been strong and the credit discipline which is the essence of successful banking and expected of both the banks and the borrowers would have been well stabilized by now.

 Sir, I would like to end this letter with a quote from Swami Vivekananda that “Things do not grow better. They remain as they are; and we grow better by the changes we make in them”. It is high time that banks and borrowers change for the better with appropriate action from the powers that be.

With respects and regards,

Yours faithfully,

A well wisher

Dr T V Gopalakrishnan