Why are PSU banks showing rise in NPA and decline in Net Profit?



In the quarter ended June 2010 Indian Bank posted unexpected spurt in NPA, in the quarter September 2010 banks like U Co bank and Union bank has exhibit unparallel growth in NPA and in coming quarter many more banks will follow the way to register addition of maximum bad assets in NPA portfolio to include their bank in the list of best performing banks. Government in USA realized the guilt after much damage and Obama openly admitted that banking culture in USA was not as good as it was portrayed by financial experts. Similarly Indian government will also realize after losing lacs of crores in NPA and when most of the banks will face survival crisis. Already government of India has infused lacs of crores as capital in PSU banks to keep them healthy during last one decade.
Now CMD of the bank which has shown abnormal fall in profit and abnormal increase in Non Performing Assets (NPA) should introspect and assess policy of allowing recruitment of direct officers in scale II,III and scale IV and even scale V or VI superseding and humiliating several working officers who have been devotedly working in the bank for last two three decades but who are not having any God father to ensure promotion and good posting .Such high profile CMD and ED should get the work of existing executives assessed from unbiased honest team of officers of other banks and also ascertain how much NPA has been added by existing team of executives only due to their malicious intention. The outcome of such inquiry will make it clear that selection of executives was also wrong and judgment of such executives is also ill motivated. Top executives are mostly indulged in corrupt practices and hence stinking and polluted water is flowing from the top. It is top officials who have inculcated bad practices in the bank and are mainly responsible and punishable for wide spread frustration and depression in officer community. Employees in general are not interested to give their all to the bank. They think it better to keep patience till the corrupt lobby is exposed or kicked out. “Na Nau Man Ghee Hota Hai Aur Na Radha Nachti Hai” this is why entire talk of growth of Bank appears Bakwas to the banker who works at ground level.
However, even now, If bank’s big bosses are still not ready to accept their guilt, bank should prepare a list of Regional Heads and rank their performance on the basis of total amount of NPA they have added during last three year or five years. Regional Head who contributed maximum NPA should be ranked as number one star performer as per tradition of the Bank. Gold medal should be given to the Regional Head who has contributed maximum NPA in last one decade.
Hitherto officers mobilizing maximum deposits were treated as Star Performers even though they indulged in bad quality of lending. Now the time has come to identify officers who contributed maximum NPA. Time has come to identify Top ten Regional Heads whose selection of BM and whose ‘Kabile Tarif’ management helped in addition of maximum NPA in the bank .gold medal should be given to those Branch Manager who have contributed maximum NPA in shortest span of time and also to those BMs who have a track record of generating NPA in branches. Special prize should be given to BM (and regional head) who has produced crores of NPA in one year of opening of Branch. Human Resource Department should now prepare History of each executive at least for last ten years which can precipitate the name of executives and Branch Managers who have contributed maximum bad assets to bank.
Similarly list of Branch Heads (scale wise and regional wise) should be prepared to know the top one hundred Branch Head who contributed maximum amount of NPA during the period under review. These top performers should then be promoted to higher scale as per whims of CMD or ED of the bank because they are the real adventurer and they can do whatever instruction is given by GM or by orders on phone. Such star performers can only arrange costly gifts for bosses and government top officials to tap handsome deposits.
Regional Heads, zonal Heads or General Managers or ED or CMD who had selected above hundred Branch Heads (who contributed maximum NPA) should now be awarded with golden gifts and cash prize and promoted to higher scale and made ED. Because such officers contributed their best in making it possible for the bank to become number one in banking industry at least on the parameter called as “growth of NPA”
It is difficult to make a list of corrupt officers because there is no proof written or verbal to establish the charges of corruption. Birds of same feather flock together. It is therefore better to award those officers whose contribution in rise in bad assets is considerably good.

Why are PSU banks showing rise in NPA and decline in Net Profit?
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2 Replies to “Why are PSU banks showing rise in NPA and decline in Net Profit?”


  1. Now there is nothing to be surprised.
    We only need the fact that happens to us, to be able to have some doubts.
    This is what happened to me when I tried to think for you!
    So I confess that I liked your question, but I find it hard to add to what you have written and certainly what you’re thinking.
    I am with you





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