Most of the banks are in the news today for one reason or the other. Banks history has nothing to do with it. Such gross misuse of power from the top has been going on since ages except that amounts involved have grown astronomically. Until we had our own homegrown executives heading the bank we heard less about such misdeeds but the moment the door opened out to people coming from outside doors of misdeeds started opening up and today they are wide open. We don’t know which bank will be in the news for which reasons, God knows. Exalted positions of MD and ED are getting desecrated and morals and ethics are thrown out of windows for sake of self-enrichment. Hope strict disciplinary action by CBI, CVC and the government instills the fear of retribution in them.
The list of government banks facing loan defaults only seems to be growing longer. There appears to be a lack of control in sanctioning loans and following procedures in loan recovery. While an ordinary citizen is put through an obstacle course to borrow small sums, there appears to be no such issue for big borrowers with clout. Quick sanctioning of loans is welcome but not at the cost of bypassing checks and balances. The role of internal and external auditors needs to be investigated as well. With such a multitude of frauds and non-performing assets, has the time come to privatise government sector banks?
The recent exposure of huge corporate defaults has become an occasion to bash government-owned banks and their staff as being inept and dishonest. People don’t seem to realise the strategic role played by public sector banks in the economy. Unlike private sector banks that focus on less risky, personal segment loans, public banks lend to the productive sectors such as agriculture, small and medium industries and businesses. These banks fulfill social commitments such as catering to unbanked areas and lending to the weaker sections under government-sponsored schemes. They also finance huge infrastructural projects that cause an asset-liability mismatch in their balance sheets.
Nothing can be more reckless than talk of privatising public sector banks. It is like asking the government to hand over India’s space and nuclear industries to the private sector. If public banks are privatised, vital sectors of the economy will lose access to affordable credit. Class banking will replace mass banking as the defining paradigm of the banking sector. The government and the Reserve Bank of India will have to equip public banks with the wherewithal to improve their professional efficiency and to put in place robust mechanisms to check insider corruption.
That the financial burden businessmen-turned-glorified fraudsters have piled on the economic foundation of the country is huge is a foregone conclusion. This will eventually be spread to the larger population and extracted through covert taxes and policies coated in fiscal jargon. This fatalistic cycle is no longer shocking. But what angers and frustrates many of us is the modus operandi that these high-profile individuals use to sneak out of the country. Time-tested methods are there to check the accuracy of the transaction and later on internal and external inspection along with RBI audit all should make banking transaction foolproof and not give scope for such serious lapses in the banking sector.
(The views expressed by the author in the article are his/her own.)
