PSBs in India are passing through a very typical situation right now. On one side
their health is serious due to mounting NPAs and on the other side they are
instructed by their guardians and owners to look sexy and beautiful
irrespective to the fact that this will not be possible even with heaviest make
up. In the race they were made to believe that whatever needed will be given to
them but they should look beautiful at any cost. Their clothes had torn off
badly , spines are broken and blood haemoglobin is too low. Cholesterol in the
form of bad management and NPAs have chocked the heart arteries.
In this situation, they have been asked to do whatever needed
but look clean. What they can do at this stage where even they don’t know where
they are standing today. Diagnosis is not perfect, they dig into one issue and
end up to ten other issues. Budget of 2016-17 was expected to take care of
their misdeeds and infuse huge sums but this too seems distant possibilities.
It is known to all now that despite rebutting by them, all
the PSU banks are passing through a very bad phase and pulling on through
window dressing in one way or the other. This window dressing or make-up has
been earlier allowed by the same authorities who now forcing banks to show the
real face without make up. what has prompted the authorities to suddenly pull
the plug? Was it more advisable to go in phases ? what was hurry? Why suddenly
a patient walking with the help of crutches is asked to throw away and walk without any
support and show as if they can run too. This may create huge image loss to the
Indian banks and also the global rating. Banks if show the real picture will
not be able to withstand amongst global banks. The repercussion may be too
dangerous for international business.,
It can not be disputed that banks should clean up the books
but suddenly doing so can put them from crutches to stretcher. It needs to be
done in phases so the damage can be controlled., Also there is dire need of
skill development, internal controls, systems and procedures, improved methods
of appraisal etc which will take their own time.
The number of PSU banks in India are too many which is
creating competition and thus run for business . Some of the banks are looking
healthy just because huge government funds are lying with them. It does not
mean they are healthy. If we look at such banks after removing the government
business and funds, their health is more alarming. Banking system should be overhauled.
Merging of banks and reducing to maximum
five banks will lead to better results. In fact we need PSU Banks sector specific which can better
understand the business and help country to grow.
CP Jain
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