SBI Wants Easier NPA Norms, NO CRR OR Interest on CRR, No SLR to Increase Profit ,More Lending AND Comfortable Survival --More Free Fund More Loot and More Freedom
SBI is silent how such large volume of NPA Accumulated?
Who are responsible for concealment of NPA, for making lesser provisions and for inflating profit in the past decade or two?
Have they taken any action against erring top officials whose dirty policy for making their Balance Sheet attractive was in the same manner in which companies like Satyam Computers did?
Have they taken any action against bank officials who were involved in sanction of loans to bad business men and due to whose malicious intention the loan became bad and SBI suffered loss?
Have they punished any DGM or AGM or GM or CMD or ED for any of bad loan accounts because high values of loans are sanctioned only by top officials thought process at branch?
Ministry of Finance and Government of India acted against Satyam Computers to save Investors, but silent on Bankers who defrauded investors by their immoral and illegal acts?
After all , these state run banks were showing better results and serving poor customers in better and friendly way before 1991 and say after and after nationalization of banks when SLR, CRR , Bank Rate were more tougher.
IF CRR is reduced to zero and if severe liquidity crisis arises in near future due to heavy rush from depositors demanding their cash back as sometime back had happened with ICICI bank, What banks will do to safeguard them?
What will happen if even after reduction or release of entire CRR and SLR, volume of NPA goes unabated adversely affecting liquidity and rolling of fund?
Who will save depositors and how will they be safe?
If borrowers do not repay their dues in time , how banks will lend in future ?
Will they demand fresh capital infusion from government of India as hitherto they have been doing to fulfill Basle norms?
And when government is also suffering from fiscal crisis, how GOI will provide capital?
After all CRR and SLR are two Safety Valves built in the system by prudent bankers to protect banks from all types of adversities. Safety Valve in pressure cooker provide safety to cook when he or she forgets taking due care before cooking through pressure cooker.
It is but natural that due to natural calamities or due to adverse business environment or due to global reasons banks have to face huge cash demand from depositors and liquidity crunch from time to time .
If CRR and SLR is abolished or reduced from present level, these banks will go fail and depositors will face the consequences arising out of faulty credit decisions of bank officials.
Everywhere in the world there is system of having safety valve like CRR and SLR to protect the interest of depositors and investors. I am unable to understand why bankers have gone insane and demanding removal of safety valve which is meant for providing safety to them also in addition to investors and depositors.
Indian has also experienced worst situation arising out of frequent cases of bankruptcy of private banks before 1969 when private banks, chit funds, Non Banking companies used to collect deposits from public offering attractive interest rate and then all of a sudden declare closure of banks. Even in recent past , we have experienced several cases of closure of many cooperative banks, scheduled banks , chit funds and NBCC because of their ill motivated actions and because of non-existence of or failed safety vale .
Why SBI chairman is bent upon diluting age old norms of CRR and SLR. Rather it is also one of many reasons that state run banks crossed the prudent limit of lending i.e. upto 60 percent of deposits they have. It is they who by making bad lending blocked their good money with bad business houses and adversely affected their liquidity.
If CRR is reduced to ZERO and SLR is also reduced, what will happen and what SBI Chairman will do if the situation of Bad assets further deteriorates, ?
How long they will continue to beg Capital infusion form Government and seek fresh equity from investors or survive with seek dilution government stake in their equity?
Further it is more astonishing that the Ministry of Fiance has recommended payment of 7% interest on CRR fund but the same MOF did not ask banks to pay 10% on all government fund parked in their bank.
To add fuel to fire Government has allowed SBI to operate in Pakistan and ignored the risk airisng out of huge stock of bad assets in the books of SBI .
To add fuel to fire Government has allowed SBI to operate in Pakistan and ignored the risk airisng out of huge stock of bad assets in the books of SBI .
It is pertinent to mention here that SBI Chairman Mr. Pratik Choudhury has been begging since long release of interest free CRR fund or for payment of interest on fund parked with RBI in compliance of CRR fixed by RBI to increase profitability of the bank. It is simply because he has understood the bitter truth of his bank, he better knows the voluminous bad assets hidden in the system and still considered as standard assets either by tampering with system or by restructuring or by ever greening of loan processes.
I would further like to add here that lacs of crores of rupees out of government fund central or state meant for various developmental projects have been parked mostly in branches of SBI.
If state and central government and all public sector undertakings demands at least 10 percent interest on deposits i.e. equal to rate their base rate fixed for lending ,made by the government in these banks, there is no doubt to me that their entire profit will vanish and most of the banks will book huge loss.
There is no doubt that the crisis which will erupt after demands of interest by state and central government on the fund kept in SBI as interest free deposit will be more dangerous and disastrous than the crisis which had engulfed many banks in USA and UK in the year 2008.
SBI Chairman says that if CRR is abolished , banks will get fund of Rs.300000/ crores and then they can reduce interest rate and increase lending. SBI should imagine a situation when all departments of state government and central government, all punchayats and mukhiyas and all public sector undertakings either remove their fund from SBI and other banks and decide to park the same in treasury?
What will happen if GOI advised them to pay interest at 10% on all funds kept with these banks?
SBI demanding interest on CRR should therefore be ready to pay interest on government fund.
Remarks of RBI Deputy Governor Mr. K C chakravorty on SBI Chairman Sri Pratip Choudhury and the manner it was used was not proper and should be condemned and should be avoided at all cost. He should call Chairman in his cabin and discuss the issue at length. After all the Chairman of such a big bank is also an important personality and deserve due respect. And any ill effect on SBI financials in near future may have cascading effect on other banks. It is known to everyone that concealed NPA is huge and hence slowly profit will face erosion and each bank will face fund shortage and capital crisis. Most of the banks have resorted to improper methods to prepare attractive balance sheet but these steps can give temporary relief and sooner or the later truth has to surface and come out. DG has since come from a bank , he understand the hidden truth and hence he can visualise the future of these banks
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