Are banks really safe

Danendra Jain (manager) (614 Points)

11 April 2009  


Our Government has provided liquidity to the tune of almost Rs400000/- four lac crores in the banking. Even than banks are not ready to extend credit and they think it wiser to park the surplus liquidity in RBI at Repo rate which is as low as 3.5% than to extend credit to traders where risk award ratio is adverse from all angle of consideration and from the point of view of recession world is passing through. At the same time it is also true those true businessmen are not ready to avail credit due to sharp decrease in demand of their product. Bad businessman are ready on the other hand to avail credit at any rate banks offer and bad Branch manager are still financing to fulfill their greed of money which they get in the form of bribe from bad borrowers. Both ways banks are not in healthy condition and all efforts are hence being taken by Bank management to conceal the Bad assets from Balance sheet in collusion with Auditors and by misusing various guidelines of RBI. It is bitter truth that RBI simply issues the guidelines but they have neither the capacity nor capability to monitor the same and nor do they have  willingness to expose the foul game being played by bankers to depict rosy picture through balance sheets by manipulation of figures as per their whims.
Even Chartered Accountants are certifying the balance sheets of the banks because they are to survive in the same corrupt system where honest and straightforward person are rejected like worms in Milk and because they have to complete the horrendous task of audit in two day or three days. Similarly Bank managers hardly get time to disburse credit for their vested interest and hence they cannot imagine of monitoring and taking adequate efforts for recovery of bad loans. Also legal system in India has  proved to be totally inactive and ineffective and banks are therefore  left with no real tool to ensure recycling of funds and it is this bad culture which gives rise to real liquidity crisis.
Government has given relaxation in provision on restructure loans and various loans under housing and export section
Banks have been instructed to restructure the large corporate loan and advances to avoid slippage in to Non Performing Assets and tried its best to save the image of Indian banks. It is undeniable truth that banks have already lost their capital due to rising NPA and gradually facing loss in business and profitability and also rising tendency of advances becoming bad. .
Banks has taken advantage of RBI guidelines of rephasement and restructuring policy announced by RBI and knowingly or unknowingly, willingly or unwillingly, openly or secretly ensured through verbal instructions to field functionaries that all loans small or big are restructured in such a way that they do not remain Bad or do not qualify for NPA and thus saved huge provisioning and thus saved large scale erosion in profit and capital base of banks. God knows how long such postponement of loss will continue in the banks in the name of global recession and that too under the leadership of world famous economists like Manmohan Singh, P Chidambaram and Mr. Ahulwalia.
Banks are safe just by transferring their accumulated malady to Asset Reconstruction Companies (ARC) formed under the guidelines of Government of India. It is easier to get rid of bad advances and get another opportunity to give finance to traders and earn more and more as bribe. If any true investigating authority in the country try to ascertain the personal assets f top executive of banks , I presume real exposure of banking and bank officers will take place and force many banks to close the shutter like various cooperative banks in the country which were forcibly closed by RBI and also send many top grade executive behind the bar.
Media is also not able to ascertain and discover the malady prevailing in the banking system in our country. Vigilance department or CBI can do nothing because they are declared non functioning department or they function under the hidden instruction of ruling party. CBI could not trap and ensure punishment to hard core terrorist or bad politicians even in twenty or twenty five years how can they imagine of catching thieves sitting in the Top offices of banks. Recent instruction of RBI to CBI to investigate misuse of banks credit by corporate houses and report to Government of India will prove futile and on the contrary give CBI officials another opportunity to earn large amount as Bribe from corporate houses as other departments like Pollution department or excise offices or custom department are doing. Or Income Tax departments are doing in the name of issuance of No Objection Certificates.
Only God can save the banks from damage and final death in the hands of dirty politicians of the country.