To conclude my views over mounting NPAs , last
but not the least key factor lies with the borrowers. The golden opportunity
for Indian entrepreneurs in liberalised economy post 1991 was unprecedented.
Suddenly many new sectors particularly with high capital intensive like
telecom, finance, infrastructure, global trading, logistics and engineering opened
up. The domestic players were further pushed by overseas players and thus the
economy started growing day and night. Those who could perform were more greedy
to grow faster and those who were left
behind did anything required to manipulate. Lot of borrowers defaulted due to
over ambitious planning and miscalculation. Greed of the borrowers sabotaged
the banking system. They were aware of the prevailing legal system which
acts as shield for the borrowers. Easy availability of funds, lethargic legal
process, manipulative practices of the borrowers, corruption, growing economy
and uncontrolled banking growth were the key factors for ever mounting NPAs.
Unfortunately, we have not yet learned the lesson
from this and continue to ignore these facts. We believe in short term vision
where infusion of funds in phases to take care of survival of banks is made by
the respective governments.
A detailed Corrective Action Plan (CAP) is
required at the highest level to avoid any future growth in NPA which is
possible only with honest and intelligent actions. In our country top 20
borrowers have exposure to the extent of 20% of total lending portfolio which
in itself very sensitive issue and needs to be handled very judiciously.
I will share my views on various suggestions to
control NPAs in next posts.
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