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Danendra jain (manager)     02 November 2010

Public Sector Bank

In the quarter ended June 2010 Indian Bank posted unexpected spurt in NPA, in the quarter September 2010 banks like U Co bank, Vijaya bank and Union bank has exhibited unparallel growth in NPA and in coming quarter many more banks will follow the same way to register addition of maximum hidden bad assets in NPA portfolio to include their bank in the list of worst (hitherto called as best ) performing banks.

Government in USA realized the guilt after much damage and Obama openly admitted that banking culture in USA was not as good as it was portrayed by financial experts. Similarly Indian government will also realize after losing lacs of crores in NPA and when most of the banks will face survival crisis. Already government of India has infused lacs of crores as capital in PSU banks to keep them healthy during last one decade.

Now CMD of the bank which has shown abnormal fall in profit and abnormal  increase in Non Performing Assets (NPA)  should introspect and assess  policy of  allowing recruitment of direct officers in scale II,III and scale IV and even scale V or VI superseding and humiliating several working officers who have been devotedly working in the bank for last two three decades   but who are not having any God father to ensure promotion and good posting .

Such high profile CMD and ED should get the work of existing executives assessed from unbiased honest team of officers of other banks and also ascertain how much NPA has been added by existing team of executives only due to their malicious intention. The outcome of such inquiry will make it clear that selection of executives was wrong and judgment of such executives is naturally always ill motivated and against the interest of the bank. Top executives are mostly indulged in corrupt practices and hence there is no doubt that stinking and polluted water is flowing from the top. They allow lending , purchase of goods and services or allow and contractual work only when they get their due share . 

 

It is top officials who have inculcated bad practices in the bank and are mainly responsible and punishable for wide spread frustration and depression in officer community. Employees in general are not interested to give their all to the bank. They think it better to keep patience till the corrupt lobby is exposed or kicked out. “Na Nau Man Ghee Hota Hai Aur Na Radha Nachti Hai” this is why entire talk of growth of Bank appears Bakwas to the banker who works at ground level.

In conclusion one can say comfortably that Nav Nirman is the mask of such Bank but the real story is entirely different. Without stopping flattery culture and without punishing corrupt officer and without stopping corrupt tradition of promoting flatterers using Interview powers, one can change the hoardings, banners, posters but cannot imagine of real reformation. Bank can exhibit lesser percentage of NPA by making bulk advances to corporate but ultimately slow poison of rising NPA will puncture entire strategy of manipulation and expose the real health in near future. Of course it will be too late then and real culprits and gang of General Managers and Deputy General Managers of that bank will get peaceful retirement from the bank leaving behind bank fighting for survival like Satyam Computers. Employees working in Satyam Computers and clients associated with the company are slowly leaving the company and new connections are very limited and that too for short period. Once image is lost, it is hard to regain it and very much difficult to rejuvenate dormant employees.    

 

 Traditional course of action which is in vogue

 

However, even now, If bank’s big bosses are still not ready to accept their guilt, bank should prepare a list of Regional Heads and rank their performance on the basis of total amount of NPA they have added during last three year or five years. Regional Head who contributed maximum NPA should be ranked as number one star performer as per tradition of the Bank. Gold medal should be given to the Regional Head who has contributed maximum NPA in last one decade. Even those officers who indulged in reckless lending and now retired from the bank but whose advances became NPA should be given some extra incentive like double of pension or gifted some golden jewel. It is difficult to make a list of corrupt officers because there is no proof written or verbal to establish the charges of corruption. Birds of same feather flock together. It is therefore better to award those officers whose contribution in rise in bad assets is considerably good.

Hitherto officers mobilizing maximum deposits were treated as Star Performers even though they indulged in bad quality of lending. Now the time has come to identify officers who contributed maximum NPA. Time has come to identify Top ten Regional Heads whose selection of BM and whose ‘Kabile Tarif’ management helped in addition of maximum NPA in the       bank .Gold medal should be given to those Branch Manager who have contributed maximum NPA in shortest span of time and also to those BMs who have a track record of generating NPA in branches.

 

Special prize should be given to BM (and regional head) who has produced crores of NPA in one year to three years of opening of Branch. Human Resource Department should now find out the name of such officers advances made by whom have mostly become bad. Bank should peep into each NPA account to find out maker of such advance and prepare a list  of such executives existing or retired which can precipitate the name of executives and Branch Managers who have contributed maximum bad assets to bank.

Similarly list of Branch Heads (scale wise and regional wise) should be prepared to know the top one hundred Branch Head who contributed maximum amount of NPA during the period under review. These top performers should then be promoted to higher scale as per whims of CMD or ED of the bank because they are the real adventurer and they can do whatever instruction is given by GM or by orders on phone. Such star performers can only arrange costly gifts for bosses and government top officials to tap handsome deposits.

Regional Heads, zonal Heads or General Managers or ED or CMD who had selected above hundred Branch Heads (who contributed maximum NPA) should now be awarded with golden gifts and cash prize and promoted to higher scale and made ED. Because such officers contributed their best in making it possible for the bank to become number one in banking industry at least on the parameter called as “growth of NPA”

Similarly RBI should make a list of star performer CMDs and EDs who helped in excellent rise in NPA in their bank. Another angle of consideration may be number of unhappy employees, unhappy customers and growth in number of cases and complaints against the bank. The more employees are unhappy, the more customers are unhappy and the more complaints are lodged against the bank the best will be CMD or ED of that bank compared to other banks. At least they can manage certificate of excellence on all parameters which RBI desire to have on record to save their skin.

31st October 2010

 



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 3 Replies

SACHIN AGARWAL (ADVOCATE)     04 November 2010

Dear Mr. Jain,

You have produced a real picture of the Public Sector Banks, which is actually prevailing now-a-days Altough I am not working in any Bank, but is associated with several Banks as professional and it is the real picture of Public Sector Banks, which you have narrated.

Democratic Indian (n/a)     04 November 2010

After reading this I feel worried about the safety of my money in Public Sector banks. Is the money of retail customers in savings account and FDs, safe in the public sector banks? What precautions one should take so that in case a bank fails, the money is not lost. Or technically these public sector banks are fail proof? One idea that occurs to me is to spread the money in different banks. Any more ideas?

Satya Narayana Palukuru (Advocates & Mediators.)     13 November 2010

Many Banks in India even today treat deposit section as one of the main banking and does not recognise the

importence and  regular follow up advances and one of the reason is staff .

realising this some of the banks has seperated advance from the branches and entrusted sanction and followup to a particular section and in no way concern with day to day admnistration of br operations.


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