Indian banks should also be subjected to stress test similar to what is being done in US but as honestly and seriously as US government do. Such tests cannot be reflective of exactly true position of any bank unless and until some banking expert peep into actual records of borrowers personally and decide whether banks have rightly and truly applied prudential norms of asset classification and income recognition .
It has to be kept in mind that 57 banks of high rank banks in USA have gone bankrupt since January 2008 and 25 banks only in the four months of current year. US authorities do not play any role in concealment of the irregularities. They have rather extended bailout package in case of need and also put in action stress test of all other residual banks to avoid recurrence of bank failure in future and to nip in the bud. Health of Indian Banks is not really better than that of US but through window dressing Banks in India appear to be in healthier condition as compared to global situation.
It will be foolish and futile exercise if RBI complete this exercise by asking one or two format statement from MD of each bank either for it or for submitting consolidated report to Ministry of Finance. It will also be stupid effort if they ask Chartered Accountant to look into the matter and submit certificate of health of any bank. Team of CA's or Investigating officers with enough practical know-how of banking and technology used by banks can expose the reality of all banks in general and PSU banks in particular only when they seriously and fearlessly involve them in this task.
I have no doubt that entire game of manipulation going on in banks for years together in collusion with ministers, government officers, RBI officials and Chartered Accountants will come out and it will be established that financial position of Indians banks is critically bad and worse than that of US.
At the cost of repetition, I can say with firmness that only honest and courageous officer can expose dishonest work of bank's top officials. Further my assertion will doubly be confirmed if assets and liabilities of at General Managers and Asst General Managers of top five banks are matched with facts and figure at the ground level. I say this because without resorting to corrupt practices one officer cannot reach top position in any bank.
Danendra Jain Ganaraj Choumuhani Agartala -799001
7th May 2009
CAclubindia
