The Indian Banks and for that matter the entire banking system is continuously in the news for all the wrong reasons. Banks have become so susceptible and vulnerable to the frauds that frauds have become a commonplace. The alarming regularity and the monumental amount involved in the act is the cause for great concern. What is even more disturbing is the fact that defrauding a Bank no more requires any extraordinary adroitness. It is being perpetrated as if it is such a normal thing. This raises questions about the security of the transactions done in the banking system and the laxity in following the laid down systems and procedures. Well, now comes the crucial question of finding the culprits (or scapegoats, if I may say so). Here two things are very important for consideration. Firstly, the length of the period for which this fraudulent transactions are performed and secondly the astronomical amount involved in it. These two factors are very vital in arriving at the conclusions and nailing the culprits. No single individual can imagine the scale of the fraud that has happened let alone committing it. There is something more than that meets the eye. The entire narrative, discussion and the focus is mainly on how it has happened. Only the small fish so far has been caught. The sharks are still at large and are having a free run in the safe heavens overseas without having any compunction or remorse. The larger question of bringing the fraudsters to book is not given the urgency and the importance it deserves. This is something unusual and bizarre and gives rise to questions of honesty of intentions on the part of the establishment.
The other serious malady afflicting the banking is the poor performance of the economy. Banking performance is always inexorably linked to the economic growth. When the economy is not in good health, naturally banking cannot be robust. This point is invariably missed out by the self declared judges and the commentators in the media. The performance of banking cannot be measured in isolation and various contributory factors have to be factored in for its objective evaluation.
The other most important factor that is contributing to PSBs NPA kitty most liberally is their vast exposure to the infrastructure, power and telecom sectors where there is a long gestation period. Any changes in the laws, changes in the economic environment during this gestation period will throw out of gear all the assumptions on which the loan proposal is processed and will affect the performance of these sectors thus impacting the banks which has taken exposure. The mind-boggling figures of NPA are a serious threat to the very existence of many banks themselves. It is only the onerous responsibility of the PSBs to engage in the nation building activities /schemes /programs of the government where the scope for profit making is either absent or abysmally low. And the private sector and foreign banks doesn't have this exposure/risk and to that extent their loan books are safe and precisely for this reason their performance cannot be and should not be compared with that of PSBs. It is simply unjust and atrocious to do that.
As if this is not enough, the public nature of the banking has its concomitant baggage. PSBs are misused and abused for all things that are simply not banking. They are often used as government offices to discharge the tasks that fall strictly in the domain of government departments.
Adding salt to wound is the new malaise of cross selling which has become contagious in the Public sector banks. There seems to be no stoppage of this in the near future despite the occasional noise made by the TUs. Their voice is just ignored and not taken cognizance of. Their meek, weak and inaudible noise has remained a cry in the wilderness. And the show is going on unnerved. This cross selling or misselling whatever one calls has derailed banking and banking has lost its direction.
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