My View on Borrowers are not criminals
The author being a banker himself should know better how NPAs are formed and get sudsidised by the other stake holders Viz; the depositors, share holders and good borrowers. No doubt economic slow down does affect the borrowers business and all defaulters cannot take shelter under this and avoid payment of bank"s dues. Even the NPAs disclosed by banks do not reflect the correct position and there are different categories of hidden NPAs. The trade off between banks and Auditors do hide actual NPAs and banks have their own ways of hiding and creating NPAs. Unless and until the banks and the potential defaulting borrowers are disciplined, this problem of NPAs would be perennial and innocent depositors and shareholders who include the Government using tax payers money to rescue the banks would be bearing the brunt. The only way to minimise formation of NPAs in banks is to have a self correcting mechanism which can discipline the borrowers and banks simultaneously through creation of a Precautionary Margin Fund which should be sufficient enough to liquidate the NPAs without squeezing the depositors, share holders and bad borrowers. This would act as a deterrent to discipline both the bad borrowers and the banks for their casual and callousness in managing the funds which basically belong to the public. The banks balance sheets would also emerge strong over a period and corporate borrowers in particular would have a better rating in the market. Is there any takers of this solution?
- Dr.T.V.Gopalakrishnan
