The banks in general and PSBs in particular are in the business of looting depositors and tax payers money in a systematic manner and the politicians and,bureaucrats become very handy to enable the loot. Even Mr Atal Bihari Vajpayee the Former Prime Minister has openly stated in the late 1990s that NPAs are nothing but a loot This is known to all but as long as the depositors,tax payers among others can bear the burden silently, why the loot cannot go on is the approach pursued all these years and the periodical bail out of banks are resorted to when the situation is going beyond control and the cracks are felt in the economic growth The solution lies in disciplining the banks' management and the borrowers and for that the Regulator has to be totally independent and made efficient to deal with them unbiasedly without any political and Government interference A lasting solution to contain the formation of NPAs was suggested in the year 2004 in a book Management of NPAs in PSBs published by Indian Institute of Banking and Finance but it was conveniently ignored despite the fact that the book was based on Ph d thesis and carried a foreword from none other than the former RBI Governor and former Chairman Prime Ministers Economic Advisory Council Dr C Rangarajan. Unfortunately, intentionally or unintentionally the suggestion was not even considered to be debated openly, leave alone considered for implementation on a trial basis although it received lots of appreciation and was recommended for fair trial by the examiners of the thesis in public interest.The solution was very simple and pragmatic and had it been implemented then, the NPA accumulation could have been greatly contained and managed without resorting to bail out of banks with tax payers money.The book offered a solution to discipline the borrowers and the banks in their management of loans taking into consideration the ups and downs in the economy due to genuine reasons of slow down if any based on political economic social and technological changes beyond the control of banks and borrowers.The other stakeholders of the economy Viz the Government, shareholders of banks, the investors and the public at large could have been the major beneficiaries and the banking system would have become strong and the twin balance sheet problem of banks and corporates would not have been an issue as of today. It could have been a win win situation for all.
This book it seems is available even now in amazon .com
Dr T V Gopalakrishnan
(This comment in a modified manner has appeared in Indian Express dated 31/10/2017 against the article Recapitalisation of banks)
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