Banking Sector of India
Vijay Mallya's episode suggests the public sector banking system of india is rotten. Officials have been accepting favours and bribes from him, making money and now the banks have NPAs. By no means citizens should be taxed to fund these NPAs. The banks should be allowed to go bust. I see this work below when I search the corruption circle for banking. Why is this not being worked upon by CVC and Modi Govt already??
Corruption in Banking – Solutions
1. Bank officers should be debarred from taking up jobs from companies having loan arrangement with their banks
2. All big compromise or write off proposals finalised by banks should be scrutinized by independent authorities
3. Transactions should be made more transparent
4. Time bound disposal of applications should be insured
5. The system should ensure free and fair methodology for the banking staff to execute their duties without the influence of high profile persons and politicians
6. Working of the CA firms should be closely monitored
7. All the paper work should be digitalised
8. Fixed metrics should be made for approval of loans
9. The nexus between the bank manager and property valuer should be broken
10. It should be made illegal for the agents to charge commission from the customers
11. If any bank employee is found flouting the rules, he should be suspended immediately
12. The bank officials should be made accountable for their decisions
13. The rules and regulations should be simplified so that they become easily understandable for the general public.
Corruption in Banking - Root Causes
1. Bank employees find loopholes to play with the rules
2. Bank officials take bribes to make extra money and don’t care if the bank loses money
3. Middlemen are used to ask for bribes so that the bank officials don’t get involved directly
4. Banks target needy customers who approach the bank and upsell to them forcefully
5. Small customers cannot pay bribes and hence the loan process is tough for them
6. The banking officials lack accountability
7. Honest bank officers are not able to perform due to pressure from other employees
8. Corrupt officials, usually in higher positions in the banks, often use their influence on junior managers to recommend such loans
9. The entire banking system is non-transparent
10. The rules and regulations are tough to interpret for the common man.
Corruption in Banking - Key Issues
1. Floating money in banks is being used by bank staff to invest in small finance companies privately to earn extra cash for themselves
2. Non-recoverable loans given by the government banks to known bad businesses (in exchange for kickbacks) eating away the huge profit of the banks
3. Asking for bribes for approving project loans is being done regularly. They usually name an auditor who tells the amount
4. They also pick flaws in the proposal to create a problem and then ask for the amount
5. Valuations for property is another area of corruption
6. The bank manager suggests the valuer you should approach. The valuer's fee has a cut for the manager. If you also do a deal with the valuer, your valuation and loan gets accepted faster
7. Banks give a locker only if we buy one of their policies or make a FD
8. Corruption also exists in posting /transfers at all levels
9. It has become a common practice among several banks that they route all paper work starting from Loan application filling to project report preparation to an agent, who will collect some fees as a percentage of loan sanctioned and the same is shared among that agent and bank officials
10. Bribe givers compete between themselves to offer bribe and corner loans with less or no collateral
11. CA firms develop relations with the bank’s credit officials and then exchange favours
12. Many branch managers provide cheque discounting facility without permission from Head Office or Divisional Office and get cheques deposited to improve their business
13. Banks verify and make loan process hell for agriculture and small consumer loans but large corporate loans are extended for chronic defaulters more
Corruption in Banking – Solutions
1. Bank officers should be debarred from taking up jobs from companies having loan arrangement with their banks
2. All big compromise or write off proposals finalised by banks should be scrutinized by independent authorities
3. Transactions should be made more transparent
4. Time bound disposal of applications should be insured
5. The system should ensure free and fair methodology for the banking staff to execute their duties without the influence of high profile persons and politicians
6. Working of the CA firms should be closely monitored
7. All the paper work should be digitalised
8. Fixed metrics should be made for approval of loans
9. The nexus between the bank manager and property valuer should be broken
10. It should be made illegal for the agents to charge commission from the customers
11. If any bank employee is found flouting the rules, he should be suspended immediately
12. The bank officials should be made accountable for their decisions
13. The rules and regulations should be simplified so that they become easily understandable for the general public.
Corruption in Banking - Root Causes
1. Bank employees find loopholes to play with the rules
2. Bank officials take bribes to make extra money and don’t care if the bank loses money
3. Middlemen are used to ask for bribes so that the bank officials don’t get involved directly
4. Banks target needy customers who approach the bank and upsell to them forcefully
5. Small customers cannot pay bribes and hence the loan process is tough for them
6. The banking officials lack accountability
7. Honest bank officers are not able to perform due to pressure from other employees
8. Corrupt officials, usually in higher positions in the banks, often use their influence on junior managers to recommend such loans
9. The entire banking system is non-transparent
10. The rules and regulations are tough to interpret for the common man.
Corruption in Banking - Key Issues
1. Floating money in banks is being used by bank staff to invest in small finance companies privately to earn extra cash for themselves
2. Non-recoverable loans given by the government banks to known bad businesses (in exchange for kickbacks) eating away the huge profit of the banks
3. Asking for bribes for approving project loans is being done regularly. They usually name an auditor who tells the amount
4. They also pick flaws in the proposal to create a problem and then ask for the amount
5. Valuations for property is another area of corruption
6. The bank manager suggests the valuer you should approach. The valuer's fee has a cut for the manager. If you also do a deal with the valuer, your valuation and loan gets accepted faster
7. Banks give a locker only if we buy one of their policies or make a FD
8. Corruption also exists in posting /transfers at all levels
9. It has become a common practice among several banks that they route all paper work starting from Loan application filling to project report preparation to an agent, who will collect some fees as a percentage of loan sanctioned and the same is shared among that agent and bank officials
10. Bribe givers compete between themselves to offer bribe and corner loans with less or no collateral
11. CA firms develop relations with the bank’s credit officials and then exchange favours
12. Many branch managers provide cheque discounting facility without permission from Head Office or Divisional Office and get cheques deposited to improve their business
13. Banks verify and make loan process hell for agriculture and small consumer loans but large corporate loans are extended for chronic defaulters more
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In public sector banks most of the senior offices after retirement are given consultant posts -----??//regulatory authority should go through this appointments and regulate it more
Mar 23
While public sector Banks carry a huge percentage of NPAs, it does not mean that there are no NPAs in private sector Banks. NPAs are there but it is not reflected as in the case of PSBs. It may not be out pf place to mention as to why RBI could not unearth these advances during their periodical audit of Banks and sound caution to the Banks. Is it a systemic failure ? more
Mar 23
sign of intolerance growing in india, as rich get way scratch free but the poor, power less will suffer. more
Mar 20
A very simple point - can a common man get rid/escape of his outstanding loan the way Mr. Mallya got? The simple answer is NO! Otherwise there would not have been farmer suicides. The Banks do not spare the poor ones in any manner from recovering loans/installments but how the same Banks fail to recover huge loan amounts from big shots. This is the irony in our country. Same set of rules should govern the rich and the poor - why this disparity? more
Mar 20
sanctioning of big loans with mutual understanding mostly. Rules are framed for poor and comman man only. more
Mar 16
