.......“For the umpteenth time, I reiterate that the reason for NPA is non-performing administration…What is really puzzling is why this affects the Public sector banks the most… In our assessment, the project appraisal and the decision making in public sector banks has been more impressionistic rather than being information based. How else does one defend the eagerness of some banks to fund power distribution companies with negative net worth!.".................
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In India, almost all such cases of NPAs are relating to corporate loans. More often in these cases, one could find collusion between the bank management, the corporate entity and many a times a political heavy weight (Minister, MP, MLA etc). In the case of KFA, the beautiful combination of the corporate and the politician are very well structured with Mr Mallya himself a member of the honoured house of Rajya Sabha. The very fact that EDs of PSBs are chosen who had scored just one or two marks in their interviews with RBI also a member of the selection committee, it is evident that such officials when they become CMDs of PSBs are more keen to protect their posts and in the process help politicians and corporates to share the loot of PSBs (unpaid / restructured loans) and of course, they also take a cut in all these. While the PSBs are at the mercy of politicians and bureaucrats at the GOI level the Cooperative banks are at the mercy of the politicians and bureaucrats at the state level. It is a vicious cycle. RBI by its long silence and inaction also is responsible for this state of affairs in the country. will Rajan Raj will clean the stable and make the banking a real professionally run one? Very little hope for the common man as it is virtually impossible to break the nexus among the three (corporate, PSBs and politicians). Even God has moved away from the scene of action.
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