If Reserve Bank of India really want to stop rising trend in Non Performing Assets of banks it should order CBI inquiry on all NPA accounts which involves more than one crore rupees. If this exercise appears to be cumbersome RBI may in the beginning identify the branches of Public sector banks where amount of NPA out of total advances is more than 20% or 30% or say 50%.
RBI should instruct CBI officials to investigate into depth on entire state of affairs prevailing in that branch.
For example
Who are the Branch Managers who worked in the Branch, Who has sanctioned advances in reckless manner, who has indulged in bribe led lending, who are high value NPA borrowers and how did they manage sanction of credit from that branch etc?
Whether the same Branch Manager and the same Regional Head has created bad assets in other branches of that bank?
Who are those branch managers who contributed larger amount of bad assets for that branch?
Whether such corrupt branch manager has been getting out of turn promotions and cream posting all the time
Who are those executive who promoted corrupt culture, who tolerated corrupt practice of the corrupt official, who stopped punishment of such corrupt officers, who played dubious role in Interview panel to ensure promotion of such officer etc
How much of NPA amount has been written off in the past?
Whether there is total failure of legal machinery in recovering overdue loan from willful defaulters?
Whether local administration is responsible for execution of court decrees
Whether political or other pressure is applied by local men to get loan sanctioned from that Branch
Whether credit officers of controlling offices of that bank took bribe and allowed sanction to bad borrowers and then built pressure on the branch officials not to treat such bad advance as but so that misdeeds of his friend is not exposed
Whether telephonic advice from controlling offices built pressure on Branch officials to sanction or to recommend loan to bad borrowers
Whether the branch ignored normal inquiry process before sanction of new loans?
Whether vigilance officials, inspecting officials, auditors, chartered accountants also took bribe to conceal the bad assets for years together due to which timely action was not initiated against defaulters to safeguard bank’s interest
Whether any natural calamity has caused loss in business, whether really bad monsoon or market slump or global reasons has resulted in loss to borrower, whether the account became NPA really to some unavoidable reasons and hence need fresh dose of finance?
Whether the reason of advance going bad is lack of proper monitoring or inadequate advance or excess lending
Whether any middlemen or broker played dubious role in sanction of loan from the branch
Whether bank’s policy for sanctioning of loan or for monitoring of loans is defective
Whether officers of the banks are not having adequate knowledge
And so on
I have no doubt that after thorough investigation of a few branches RBI will come to conclusion that corrupt officers sitting at controlling offices are providing umbrella to corrupt subordinates sitting in selected branches. It is the chain of corrupt officers who are mainly and primarily responsible for spurt in NPA percentage of that branch and it is they who have inculcated corrupt culture in bank by promoting flattery and bribery culture. RBI will have to know the reason and take remedial steps as soon as possible to stop rising trend in NPA of banks.
Deputy Governor Mr. K. C. Chakravorty have admitted that after change of chief of a bank profit of that bank sharply falls and at the same Gross NPA of that bank shows abnormal rise. Mr. Chakravorty should understand that sudden change in result of any bank is nothing but sum total of sudden change in similar data of various big branches. He should identify and punish officers who concealed the mischievous lending done by an officer. He should find out the list of officers who always tried to hide evil works of corrupt officers as long as particular person was head of that bank or particular person was head of any branch.
It astonishes that even after bad experiences in number of banks; RBI has not taken any punitive action against any of CMD or ED or top ranked officers of any bank.
Is there close nexus between RBI and PSU bank official?
Why bankers always blame external reason like global recession or inflationary pressure for their mischievous work?
Why top ranked corrupt officers are always acquitted from punishment and why and how low level insignificant officers are invariably punished for fault of top ranked officers?
Lastly who are the persons and authorities accountable, answerable , punishable and responsible for such unhealthy culture prevalent in bank?
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