Danendra Jain.

Government of India through various Finance Ministers has always put thrust on merger oand acquisition of banks to save them from probable disaster. This is not new suggestion by current Finance Minister Mr. Arun Jaitley but it has been suggested several times by FMs during last three decades .

In my view , merger of banks is not at all the permanent solution to cure the critical health of PSU banks . Health of banks have been deteriorating year after year only due to ill-motivated policies of the government and bad execution of good policies by bankers in nexus with bad borrowers and bad politicians.

Ruling class never took any serious step to stop rise in bad assets , rather they always added more and more bad assets to gain political advantage for their respective parties. PSU banks have been exploited by almost all past governments.

Present government and present Governor RBI are at least trying their best to clean the balance sheet of PSU banks and they have been trying to know the hidden volume of bad assets so that at least from now onwards remedial steps may be taken .

Solution lies in improvement of quality of recruitment of officer in banks, improvement of promotion process to stop reign of bribery and flattery , stopping political leaders who exploit bank for their vote bank, improving efficiency of judiciary in dealing with cases of banks related to recovery, stopping culture of loan waiver and mass loan mela organised by banks under political pressure and improving the quality of processing of loans by stopping target oriented lending.

How to deal with NPA are submitted below in brief.

_ By improving following key points bank may contain creation of NPA to a great extent.

Improvement of Quality of manpower, their integrity, their skill, knowledge about product, ability to understand capability, character and potential of loan seeker
Quality of management:

Proper motivation, by promotion and by incentives

Proper training, allotment of work as per potential and as per will of the employees,
By Avoiding target imposition, avoid loan melas, do not build pressure for credit growth in time frame fixed arbitrarily by bosses.

Quality of politics

Building pressure for financing in various government schemes, pressure for compromise settlement, write off of bad loans, for infrastructure projects, power distributing companies, power manufacturing companies etc where profit and repaying capacity of the project is not guaranteed.

In case account goes bad due to abnormal or natural reasons, government should support them from outside from a different body but not through bank, because it sends wrong message to good borrowers.

Strong administrative support to banks to deal with willful defaulters,
Quick legal action, disposal of cases in time bound programme, advising courts and tribunals to treat banks money as government money and punish those who do not side banks in nexus with defaulters

Proper manpower support to courts and tribunals,
Of audit and inspection, vigilance, risk management, loan assessment should be kept away from all outside influences and should not be victimized in way of transfer and rejection in promotions.

Other agencies Such as CA, Valuers, Legal experts, architects who cheat bank or who submit false and manipulated report should be punished.
Even internal audit teams are not free to write freely about a branch. External auditors, CAs, Rating agencies all are victim of illegal gifts and obligations offered by evil minded borrowers.

Adequate manpower and adequate time are not provided to auditors. They selected as per whims of bosses even if the person concerned is not talented

CAs for Concurrent audit or statutory audit are selected by evil bankers only.

Loan and charity cannot run together, from same platform

Banks have to become either a social welfare entity or totally a commercial entity, both cannot run together.

Private Banks work under totally a different and independent framework whereas PSU banks are subjected to several social welfare schemes.

Disclaimer:The views expressed above are the author’s own