Asset Quality Audit done by RBI in last year only for Top 150 accounts has exposed hollowness of almost all public sector banks. Most of them are either in huge loss or faced huge erosion in profits during the financial year 2015-16. Big jump in Gross Non Peforming Assets (NPAs) have been reported by almost all PSU banks. Health of private banks is also not as good as reported in public domain. If all loan accounts are audited by RBI , one may very well imagine the fate of these banks, one may also understand the gravity of sickness in banks and at least realise now how much the previous government had already damaged during decades of their misrule.

Biggst bank ,SBI will declare result on 27th of this month. You may imagine how much painful the result of SBI in fourth quarter will be if they too follow the advice given by RBI Governor Mr. Raghuram Rajan regarding asset quality of top 150 accounts audited by them. I have no doubt that SBI will leave other banks far behind in matter of loss and Gross NPA and break all records of the past.

SBI has delayed maximum in publishing results only because they are perhaps busy in manipulating figures so that damage is reduced to best possible extent. But in the long run, they will also have to come out with correct figures on losses, provisons and NPAs. Some other banks have also cleverly and fraudulently managed to save their image by making lesser provisions for bad assets and booked little profit fraudulently just to save their falsely brightened career from damage.

Finance Minister Mr. Arun Jaitley and RBI Governor Mr. Rajan are still in dark about real volume of stressed assets. They are unable to visualise the volume of pain hidden in bank's books of accounts. NPA may grow from 5% to 50%, if all banks shows true honesty in saying spade a spade, in recognisiing and identifying bad assets strictly as per RBI prudential norms. Still, they have huge volume of bad and stressed assets hidden in disguise as standard assets so that lesser provision is necessitated.

Clever bankers have been manipulating figures for years and decades. Window dressing is persisting for decades despite all preachings by RBI and MOF. Every quarter, they claim that health of their bank will improve from next quarter. But each quarter, health deteriorates only. This has been happening for last five to ten years. FM and RBI will take long time to understand the ground reality.

Let us see when real truth emerges out and when real reasons are identified by Ministry of Finance and by RBI officials.

Clever and corrupt bankers as well as politicians usually blame economic slowdown or interest rate or nature but never punish the real guilty. They say on the one hand that GDP growth of the country is highest in the world. But when they talk of health of banks, they say that bad assets are creation of ecoomic slowdown and global recession. Is it not inconsistent with ground reality?

Until real guilty people are punished and until there is change in culture of bankers and politicians, we should not dream of reformation or real cleaning in banks. We need not focus as much on cleaning of balance sheet as it is needed to focus on cleaning of minds and hearts of bankers, borrowers and politicians.

FM Mr. Arun Jaitley has said yesterday, that media men , opposition parties and court should not intervene in banking activities related to lending as well as compromise with recalcitrant and defaulting borrowers. I would like to mention here that neither media men nor court interferered anytime during last years and decades in the matters related to lending decisions and in decisions related to writing off of bad loans or in arriving at settlment with bad borrowers. Banks have rather enjoyed absolute freedom in sanction of loans and in writing off of bad loans. Politicians exert pressure from top, but they do not burn their fingers by giving written instructions to do this or do that. Political masters advice Chiefs of banks on phone what a bank has to do and what not.

Rather this unregulated freedom given to bankers in the name of reformation and autonomy to bank management in the year 1991 has only resulted in accumulation of so much pain and so much rise in sickness in these banks. Techonologial advancement and introduction of Core Banking Solution has made it difficult for bankers to conceal their sin for long.

FM cannot understand the real picutre of hidden malady and bad culture of bankers and politicians until he continues to collect the views from same gang of Chiefs of Banks who have contributed in increasing pain in these banks. Thieves cannot suggest right and correct ways to police to catch culprits. During last three decades, every FM has accepted the hidden malady and irregularities in banks but they cleverly ignored the prescribed medicine to cure the sickness. Various committees suggested various ways and means to clean banks, but unfortunately none of them put into action.

Vinod Rai, head of the newly formed Bank Board Bureau (BBB) also in last few days has said repeatedly that bank officers should not be questioned how they take lending decisions and how they write off bad loans and how they sacrifice huge amount of money in arriving at settlement with defaulting borrowers. Vinod Rai also perhaps assumes that all bankers are discharging their duties with honesty and sincerity. He also knows that politiicans of this country are beyond control . He knows that vote bank politics of ruling or opposing parties cannot be stopped. That is why he advices total blindness towards ongoing corrupt culture.

I hope conception and perception of learned, honest, sincere and intelligent person like Mr. Vinod Rai will drastically change, if he also peeps into accounts of any bank. Only forensic audit of each high value loan account, at least loans and advance with outstanding value more than Rs. One Crore, can reveal how much problem is man made and how much is due to unavoidable natural reasons.

If we look into reasons of smaller loans too, the situation will prove to be explosive and suicidal too. Because banks cannot avoid small loans which are equally unsafe and irrecoverable. They know that in the name of social welfare, banks have to lend farmers and small traders and industrialists to inflate figure of priority sector lending. Banks have to take part in charity banking as taught by political masters. Waiver of loan has been resorted by bankers only at the instance of political masters from time to time and this has adversely affected the repayment culture in the country. Loan Mela culture has also contributed in worsening lending quality and in rise in corruption in banks. Let us therefore concentrate on only high value loans.

Culture of loan melas, culture of write off of loan and culture of protecting bad officials and politiicans has damaged health of banks. To add fuel to fire, regulators also resort to evil ways to cure ailing banks. FM suggests merger and consolidation of banks. In my view , merger is not at all a solution to problem of bad assets. Merger will simply change the shape of banks and bring its name in list of top banks of the world. But it cannot change the quality of lending and quality of human resources running these banks. It cannot stop politicians exploiting banks for vote bank and it cannot stop them for serving interest of their kith and kin, friends and relatives.

FM focus on quality of ED and CMD, but real improvement will occur only when due recognition and value is given to real performers in promotions and transfers. Quality of officers heading branches and administrative offices of banks is too poor to protect banks from disaster.

RBI Governor Mr. Rajan says that one third of ATMs are non-functional or not managed properly to service requirements of ATM cardholders. He should try to understand why has it so happened. Mindless and reckless expansion of ATMs and Branches has resulted in pathetic postion of not only ATMs but also branches of various banks.

Banks in public sector has opened branches without applying their brain and without having vision about future of these branches.They open ATM after ATM and branches after branches only to keep ruling party happier and in good stream so that their personal career gets brightened.

Politicians are also responsible for reckless expansion of branches. It is they who for the sake of vote banks built pressure on management of these banks to open branches in each village and then open one ATM associated with each branch. They do not understand or they are least bothered whether these ATMs and Branches will be economically viable or not.

I have no hesitation in saying that not only one third of ATMs, but more than half of branches of PSU banks are critcially ill and non-productive. There are many branches in the country which do not receive transactions from even 50 customers a day, but they have opened one ATM to such branches. Naturally per day hit at these ATMs can never be profitable. Similarly, bank officers do not have time or do not have quality manpower to adequately service these ATMs in time.

Prime root cause behind deteriorating position of health of banks is also its Human Resource Policy and its real execution in practice. Recruitment and Promotion taken place during last three decades has simply promoted a culture of bribery and flattery only. Officers and employees in general who are real performers are neglected and rejected in all processes of transfers and promotions which are said to be merit oriented. This is why majority of senior and experienced staff are not taking part in promotion processes taking place in banks every year.

Bank management use to say that they have scarcity of good workers, it is totally wrong and false. Still there are huge number of good officers who do not want to be elevated because they cannot manage flattery and costly gifts for their bosses. They do not want their families to be disturbed due to whimsical corrupt officers ruling their banks. Every employee who joins a bank had high ambition to rise . But the culture of their bosses shatters their dream and they think it safe to avoid taking promotions . Who will change this culture? It will not stop until there is change in mindset of bosses.