All checks and balances practised in banks have been given a go bye over a period  for reasons known only to the  Banks Boards and Perhaps to RBI also. The periodical transfer of staff particularly handling sensitive desks and fraud prone areas, internal audits, concurrent audits, periodical visits of Executives to branches to have a feel of the branch functioning through interaction with staff, major advances customers, depositors etc , insistence on control returns to have a sense of wrong advances and check on them, external audits where window dressing is very liberal to cover up all wrong doings, frauds,etc have been either diluted or totally given up.. The Reserve Banks Control through periodical inspection of major branches and  branches where advances concentrate, scrutiny of sensitive returns, insistence on adherence to prudential norms etc  have been made perfunctory of late and savings on costs  through curtailment of staff, cancellation of trainings, stoppage of  essential supervisory and regulatory exercises have been justified diplomatically and convincingly allowing the rot to take place in banking. The over all result is wide spread frauds , loot through bad debts, and unjustifiable expenditures in banks resulting in loss of credibility in Governance standards and weakening of banks functioning.  Less said the better about banks functioning these days.

Dr T V Gopalakrishnan

( Comment given in Business Standard.)

PNB Scam and trade facilities

This refers to to your Editorial PNB Scam should not stop trade Finance (ET dt 23/2/2018). The fact that Nirad Modi scam did happen because of laxity in the checks and balances on the operation of loan accounts particularly misuse/ abuse of Letters of Undertaking should not lead to stoppage of facilities facilitating trade finance and development of international trade.  As it is, the public sector  banks are struggling  to survive because of non expansion of credit and high cost of funds thanks to unprecedented staggering of bad loans, the stoppage of non fund based limits like letters of undertaking for some operational  lapse  like reconciliation of accounts between banks,  exclusion of transactions from core banking and avoiding swift guidelines to help some unscrupulous borrowers can only add to the miseries of PSBs affecting adversely international  trade and commerce. No doubt the PNB scam has necessitated the  need to tighten the regulation and supervision  of banks both internal and external which unfortunately got relaxed under the guise of liberalization and cost cutting, but this should not take away the role of banks in providing the much needed support to the economy at this crucial time when  global expectations are very high and opportunities are plenty to perform well and emerge as the fast growing economy. Time has really come to live up to the promise of minimum Government and maximum Governance and this requires an overhaul on the role of RBI, Banks ‘Board Bureau and PSBs’ Boards. Earlier the Government keeps away from banking the better for the Economy. Ease of doing business should really ease but should not result in frauds and scams for  want of adequate checks and balances in banks day to day  operations.

Dr T V Gopalakrishnan