Guest column

Deal with default first EVER since the publication of Verma Committee recommendations and later the controversial CII report, a lot of sta...

Deal with default first EVER since the publication of Verma Committee recommendations and later the controversial CII report, a lot of statements and arguments are floated by different persons. Majority of them without going into the depth of the issues and situations. Most of them involve wild remarks about the NPA status of UCO Bank and United Bank of India UBI. It is therefore pertinent to clear certain misunderstandings.

There is no denying the fact that NPA of UBI is to the tune of 14.73 per cent. But it is certainly wrong to blame the trade unions and the bank managers for such high level of NPAs. As far as UBI is concerned, it is relatively unknown in this part of the country with only 28 out of 1,333 branches in Maharashtra. Whereas the spread of branch network of UBI is 700 branches in West Bengal, 262 branches in North East and approximately 200 branches in Bihar and Orissa.

Thus almost 89 per cent of the branches are in the eastern and north eastern parts of the country, where the rate of economic growth is negative. It is thus impractical to expect that any FI having such a widespread network in states whose economy is in crisis to show positive results.

In spite of all disadvantages, UBI has posted net as well as operating profits for last two years. Basically, there are two primary reasons for an advance becoming non-performing: the market conditions, economic situations which turn an industry or trade or business into sick advance; the promoters are not interested in running the business into a profitable unit and deliberately convert the enterprise sick to siphon off the funds.

It is the second reason which is dangerous and reflects the attitude of many big business houses, and is damaging. When scions of industry make derogatory remarks against public sector banks, it is understood that they have certain vested interests including taking over these FIs. But when parliamentarians, present or former make such wild remarks without really going deep into the root causes, they are unacceptable. What happens when parliamentary committees visit these public institutions is a well known fact comfortable stay at five star hotels, gifts, visits to nearby tourist spots and temples. How many of them really study the real situation?The best possible solution to the large volume and percentage of NPAs really lies in the changing laws of recovery and strengthening of debt recovery tribunals. Willful default of bank loans should be declared and or treated as a criminal offence.

This is where the parliamentarians can really play a positive role. The nexus between the politicians and the trade and industry is well known. Thus to change these laws a strong political will is required.

The innumerable court cases for recovery remain pending in various courts for undeterminable periods and even after the decrees are passed, the process of taking over the collaterals mortgaged to the banks is extremely difficult. The contributions of public sector banks in the development of national economy cannot be denied.

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The inefficiency of the bank managements, lack of professional approach, tendencies of delaying decisions and indecisiveness, obsolete systems, bureaucratic approach, aversion to modern technologies have also contributed to the weakness of these strong public sector banks. The government as the owner and the RBI as the controller should address these management problems on priority basis.

No doubt, the trade unions also need to change their mindset. Inculcating of a strong work culture and positive outlook towards the impending issues shall only be useful in changing the drab industrial scenario.The author is a director of United Bank of India