NPAs in PSU banks increase by 51%

The increase in NPAs of PSU banks by 51% is something of very high order and there is no justification of whatsoever to make the tax payers to bear the loss of banks on account of NPAs. The basic cause of NPAs is the undisciplined behaviour of the borrowers and they need to be made to behave responsibly when they use deposits of banks which belong to public. It is something not digestible to bear the loss of Kingfisher like borrowers by public as the loss of PSU banks is ultimately borne by the GOVT using tax payers money. The only way to tackle NPAs of banks is to make the borrowers to compulsorily contribute towards a fund in banks books based on borrowers performance assessed on a continuous basis and build up this fund over a period to absorb the losses on account of NPAs. It is more sensible to make the borrowers particularly the bad ones to bear the cost of NPAs rather than by other stakeholders.Loss on account of NPAs has to be borne only by the bad borrowers.
(This appeared in BusinessLine dated 21/03/12)
from: Dr.T.V.Gopalakrishnan
Posted on: Mar 21, 2012 at 08:30 IST

SBI's rating and Govt of India

The editorial is well written.The downgrading of SBI's rating by Moody reflects Govt's insensitiveness to safeguard the largest bank of the country with timely measures to raise its capital to the prescribed level.The Chairman of the bank has also to be blamed for his utterances against the previous chairman for allged window dressing of banks's balance sheet. The banks operations continue to be strong despite adverse economic conditions. Its deposit and advance growth have been well above many pvt sector and public sector banks.Its NIM is also comparatively high comapred to that of its peer group.The npas, provisions and profits have perhaps not been at the desired levels and for that the general performance of the economy needs improvement. All said, the bank has a competent management and support of its large clientele of customers and investors.The downgrading is only a warning to the bank to do well and it is not going to affect the bank's operations in any manner.

T.V.Gopalakrishnan

(This appeared in The Hindu Business Line dated 7/10/11)

SBI and Moody's rating

Your editorial is well balanced and most appropriately concluded by saying that Moody's rating of SBI must be seen as a note of caution rather than as an alarm bell. The present predicament of SBI is the making of its present chairman for his utterances on banks' balancesheet as on 31st March 2011. Further the economy has not been doing well because of Govt's inefficient and ineffective fiscal policies in controlling inflation,black money, corruption and providing the much needed support to give a boost to economic growth. Of late its quality of assets has been deteriorating affecting capital adequacy, profitability and recycling of assets. All said, the Moody's rating basically based on some quarterly results do not reflect on the bank's overall strength with the strong backing of the Govt and its competence to overcome the temporary upsets. SBI is the largest PSB and it has abundant resources at its command to improve its performance in terms of NIM, asset liability management and capital adequacy ratio. It enjoys the confidence of investors, depositors and borrowers and the moment,economy starts showimg some sysmptoms of good growth, in no time the bank's performance will turn better. Moody's rating is only a warning to the bank to be more alert.

Dr.T.V.Gopalakrishnan