Friends
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.
CP
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