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

Can the Bankruptcy law deliver?

The Bankruptcy law is good but the fear is it is one more law in the list without any hope of bringing in any tangible benefits to the banks or the economy. Most of the bad debts are  the creations by the interested parties and they all know as to how to hoodwink this law also as they have been doing with all the existing laws of the country  with the connivance of all concerned authorities  and they all know as to how to escape the enforcement of the law if it happens..As it is, the country does not suffer for want of laws and if all the existing  laws can be enforced without fear or favour, most of the problems faced by the economy would vanish automatically. The fear of law is simply absent and the enforcement of law can be easily manipulated as the system permits it. For the banks' bad debts, the better law would be to ensure that the banks and borrowers follow some professional approach in the conduct of loan portfolio and both follow some ethics and discipline in the use of public deposits. Doing business without any ethics can only ruin the country and some  unscrupulous fellows would accumulate the wealth at the cost of public. Any law would not be of any use as long as ethics and values get ignored in the conduct of business involving public money and enforcement of laws is not effective

Dr T V Gopalakrishnan

( This comment appeared in Business Standard dt 8/2/16) .

Is not IBA morally responsible to protect banks from bad borrowers?

What is the Contribution of IBA to reduce the burden of bad debts of banks? Has it done anything worthwhile to educate the banks and borrowers to pursue professionalism in their businesses.? has it done anything to convince the Business lobbies to reduce the bad debts of banks? has it approached the government to prevent appointement of non professional directors in banks Boards? has it approached the represntative Bodies like Indian Merchants Chambers, FICCI, Exporters association, various other associations representing different categories of industries, SSI associations etc to discipline their members and advise them to condut the loan portfolio of banks professionally, ethically  and avoid becoming NPAs? What is the proactive role played by the IBA to justify its own existence. Does'nt it have moral responsibility to rescue the banks from bad borrowers and apprise the representative bodies as to how the borrowers cheat and dupe banks in different ways? Even the reprentative bodies make a hue and cry to cut interest rates and keep themselves silent when thheir members behave erratically with banks?.

Dr T V Gopalakrishnan

Time to act and deliver the result

The hype created by the government and the achievements on the economic front do not match. The credibility of delivery from the Government is gradually disappearing and there is frustration among the people.Why it is so has to be introspected by the Government and if it is convinced of below expectations of its performance, this is the time to show its determination and act without loss of time further. Action is what is needed and the course of action should be reflecting in the ensuing budget. People are losing patience is a fact and is the ground reality. All segments particularly agriculture, Industry can definitely do well irrespective of the external situation but the initiative from the Government has been missing except generating hopes every now and then.The article should serve as an eye opener and the Ministers and Bureaucrats in particular have to deliver in action

Dr T V Gopalakrishnan

(This comment appeared in Business Standard dt 8/2/16).

Inflation , Prices and the life of Retirees and common masses

No Doubt Dr Rajan is a renowned economist and a champion of Inflation but his dosa economics to illustrate that the retirees are far better off today in the background of lower CPI at 5.5% does not carry conviction in Indian situation is the ground reality. The inflation component to arrive at 5.5% and the prices the compiler collects sitting in some office in Delhi do not really reflect the retail prices the Retirees pay for their day to day living is What Dr Rajan has to experience if not experienced so far. One visit to a doctor for a fever costs not less than Rs 1000 these days is a fact and where it reflects in the 5.5% inflation the retirees do not know.  The fact that  the Tur dal , ulund dal are selling between 180 Rs and 220 Rs a Kg where as vegetable oils are selling at  between Rs 150 and 200 a liter  which the retirees pay ,out of their reduced income of interest rate after income tax  may not be known to Dr Rajan perhaps.. The dosa is priced at Rs 50 and 65 in hotels and it carries a service tax of 14.5 % and Dr Rajan's calculations do not hold good at least for metropolitan centers..The conveyance charges incurred by the Retirees to visit some places even by bus these days carry a cost and where  and how it reflects in the 5.5% inflation is  not known to retirees.Their  take home incomes by way of interest have drastically come down and the expenses incurred by way of rent / maintenance Charges for their accommodation,  living expenses involving water,  milk, vegetables, provisions, medical , transportation  electricity charges , news paper /TV Charges , servant maid's wages, etc  have gone up by leaps and bounds because of increases in the prices coupled with the  compounding effect of Service Charges. Dosa Economics cannot be a convincing answer to the retirees and this is not expected from an eminent economist. who have been moving through out the world. Such statements from politicians are understandable but definitely  not from professionals of such high caliber even in lighter vein..Masses are suffering from high prices but may not be suffering  from high inflation is the fact of life.Price levels and Inflation are totally two different things for Indian Masses.

Dr T V Gopalakrishnan

(This comment is a knee Jerk reaction to Dr Rajan's speech "Retirees are better off " that appeared in Business Standard dated 7/2/16).

SEBI and Retail Investots in Ltd Companies

SEBI should bring about once in a while with reports on Companies which have 1) Excellent Corporate Governance Standards 2) Good Dividend payment records 3) Good Bonus declarations 4) fudged accounts having subsidiaries  and  window dressing of balance sheets by showing losses in some subsidiaries  5) delayed conduct of AGMs and delayed payment of dividends etc 6)  raised funds through IPOs and failed to keep their promises. Some of the IPOs are greedily priced and after raising the funds nothing is known about the Companies..7) failed to conduct AGMs and have not been informing anything about what they are doing. 8) have defaulted to banks and have been rated by banks as Non Performing Assets..9) Auditors and Accountants not well reputed and rated by the Chartered accountants Association of India 10) failed to Comply with the Government's regulatory requirements like PF Remittances, Excise duties, tax payments etc  11) Excellent track records for contributing towards the Corporate social responsibility.
The retail share of investors need to be augmented to prevent volatility in the market.More the retail investors the better for the Companies, for the economy and the market.The SEBI needs to be more proactive to make the Companies perform well in all respects by openly reconising them for their contribution to the economy in terms of GDP growth, Corporate Governance Standards and satisfying the Customers and the shareholders as well. 
Dr T V  Gopalakrishnan   

Banking system is in a mess.

A well written peace coming out of experience as a former banker and as a customer now. Banking has changed a lot and unfortunately for the worst.It has come to streets in different forms without having any knowledge of its own customers despite having supposedly stringent Know Your Customer norms verification.Competition among banks has taken away the principles of good banking and the greed to make money at any cost has taken away the banker customer relationship losing in the process the good money and the soundness of banking. The data is so to say misused and not put into strengthen the business of banking through improved Customer relationship. Machines alone cannot achieve the results and the Techonlogy not supported with human touch can only ruin the business in the long run. This is what is being wiitnessed these days in banking and other areas.. The deposits are falling, NPAs are increasing, profit margins are getting eroded day by day and the presnce of regulation and supervision is vanishing fast under some external pressures, have been unfortunately the result of too much of data , too much of technology and too less of human touch every where.Hope this article will turn out to be an eye opener of the powers that be.

Dr T V Gopalakrishnan

(This comment appeared in Money Life dt 5/2/16 in response to an articel on Big Data).