By Nitya Chakraborty
Finance Minister Arun Jaitley
in a recent statement has blamed to a great extent the officers of the public
sector banks for delinquency in dealing with NPA accounts. He has mentioned
that 6049 officers have been held responsible on account of staff delinquency
in NPA accounts and in all cases, depending upon the amount involved, CBI and
police complaints have been lodged.The manner in which the Finance Minister has
approached the issue of tackling of NPAs does not give credit to him as a
senior cabinet minister who is expected to take a holistic view of the
continuing crisis in the country’s banking system It is a prejudiced view and
rightly, the ALL India Bank Officers Confederation, the body of the officers of
the public sector banking industry, has protested against these observations of
the Finance Minister.
The AIBOC in its statement
issued on Sunday said that the organization commanding a membership of 3.20
lakh officers is shocked and appalled by the Minister’s biased and misleading
statement which tries to deliberately portray the bank officers as the main
players responsible for the NPA crisis. The AIBOC has pointed out that the
number of delinquent officers, even as per the management estimates are less
than 1.5 per cent of the total number of bank officers. Even then, the number
is miniscule and the other 98.5 per cent of the officers are hardworking,
honest and carrying on their responsibilities despite many constraints.
Mr. Jaitley should have gone
in depth into the roots of the crisis and focused on the real factors which have
led to high NPAs over the years. Over 75 per cent of the total stock of NPAs is
on account of large corporate entities. Such large corporate loans are
sanctioned by the top management executives and not the lower rung officers.
Big-ticket loans have been mostly sanctioned by the Bank Boards or Committees
constituted by the Boards. How many instances are there where the Government
has held the members of the Bank Boards and the top management executives
responsible for the big ticket corporate loans becoming NPAs? When it is the
top management executives who enjoy the lucrative incentives, unmatchable
perks, power and authority, should they not be held primarily responsible for
the erroneous decisions made by the Bank Boards?
The Bank Boards also have representatives/nominees
from RBI, Finance Ministry and others nominated by the Government. Mr. Jaitley
does not mention any action being taken against any such Director, holding them
responsible for any of the NPAs. Are they not responsible? Is it also not a
matter within the knowledge of the Government that RBI wants to withdraw their
representatives from the Boards of the PSBs in order to insulate themselves
from administrative and credit decisions of the Bank? Is this not another
instance of shirking responsibility? The Government has stopped nominating the
workmen and non-workmen (officers) Directors on the Bank Boards. Even then, the
officers are being given the blame while not a word is spoken regarding the
accountability of the Bank Boards.
The AIBOC has been
consistently demanding the disclosure of the list of wilful corporate
defaulters, in order to name and shame them and to prevent them from doing
further damage to the banks. Despite repeated requests and letters addressed to
the Reserve Bank of India and to Department, no action has been initiated so
far. The decision makers of the Finance Ministry appear to be uninterested in
divulging the details, despite being prodded by the Supreme Court and the CIC.
No purpose is being served by this non-disclosure other than protecting the
wilful corporate defaulters.
Corporate defaulters, economic
offenders and fraudsters like Vijay Mallya, Nirav Modi, Mehul Choksey etc. have
fled from the country after fleecing the PSBs of thousands of crore. They could
run away because of the lapses on the part of the Government and investigating
agencies. How many such individuals have been allowed to flee the country?, the
AIBOC asks.
According to the AIBOC, the
large-scale accumulation of NPAs in PSBs has occurred because of the following
reasons:
a. Most of the
defaults/delinquencies pertaining to large corporate houses are on account of
evil design, misuse of trust and confidence reposed by the banks in their brand
value and corporate stature.
b. Large advances are generally
made under multiple banking/consortium arrangements, where the loan proposals
travel through many pairs of eyes before it is sanctioned. These loans are
sanctioned at the highest levels of the individual banks. The possibility of
nexus between PSB managements and delinquent corporates need to be probed
seriously.
c. As far as bank officers are
concerned, they are faced with several handicaps: i) PSBs entered into an arena
of Post closure of Infrastructure and Development Institutions viz. ICICI, IDBI
etc. with inadequate expertise, exposure and experience in project financing;
ii) Misplaced business priorities thrust by the managements; iii) Too much of
multi-tasking; iv) Fear of being branded as non-performers; v) Directives of
top management on credit decisions; vi) Priority to non-banking activities like
cross-selling and vi) Inadequate staffing being the mother of all ills.
It is high time the Finance
Minister and the RBI take up seriously the points made by the bank officer’s
body. AIBOC and the AIBEA are the organizations which have kept the banking
system running despite many lapses by the political masters. Mr. Jaitley must
make a through appraisal of the reasons for the crisis rather than blaming officers.
(IPA Service)
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