bail-out

Source: The Hitavada      Date: 26 Jan 2018 10:03:13

THE Government has begun implementing its promised bail-out plan for 20 top nationalised banks in the country, with the first installment of Rs. 88,000-plus crore to be infused into the finances of those banks by the month of March. This will be the initial infusion of funds that would ultimately amount to Rs. 2.11 lakh crore. There is every reason to believe that this bail-out plan will transform the nationalised banks into thriving enterprises that would be able to assist the Government in further refurbishment of the national economy in the years to come. Let us hope that the banks would, from now on, conduct their operations more responsibly and more carefully, and become drivers of economic growth in the real sense. 

However, there is another area of concern that also needs an equal attention. It pertains to the conduct of the political component of the Government as regards banking operations at higher levels. If this component conducts itself equally responsibly and carefully, the bail-out plan would make a critical and positive difference to the economy. If this component continues to conduct itself irresponsibly, as it did during the ten years of the Congress-led UPA Government, then no amount of funds infusion would work well for the country.


Thus, the most essential criterion for successful working of the bail-out plan for banks is allowing the banks a complete professional freedom to process loan-requests from bigwigs. If the banks follow completely the norms and conditions specified by the Reserve Bank of India (RBI) without fear or favour, then nothing could go wrong in as big a manner as the country witnessed in the past years. There could still be a few cases of bad debts owing to very peculiar conditions of a case, but on the whole, things would move smoothly.


The bad days the country’s major banks came to face were because of both the components -- unprofessional approach of the banks, and political dabbling in their affairs. As a result of both, the banks kept making loan disbursements to undeserving parties that had no intentions to pay back the liabilities. The massive amount of money that the country lost due to Non-Performing Assets (NPAs) was nothing but a totally avoidable curse -- inflicted upon the nation due to political dabbling and inept banking.


One of the worst examples of inept and corrupt banking came to fore during demonetisation drive the Government undertook. The banks played clear foul. They allowed their favoured parties to exchange old notes with new ones to tune of crores of rupees. This happened all over the country -- brazenly, shamelessly -- while the common people with just a few hundred or thousand rupees at stake standing in unending queues of harassed men and women, at ATMs and bank counters. That was one of the darkest phases of Indian banking when the common man felt cheated and the Government was actually cheated. Several cases are known of the banks taking unofficial routes and following inappropriate procedures to favour some parties. Most such cases often lead to wasting of money through wrong practices.


All this will have to be avoided at all costs from now on. For, any lapse in this strict regime will only mean further damage to not just the larger economy but also to the people’s faith in the system. This bail-out issue does not relate, thus, only to money but also to the psychological shock the country received when it knew that the banks were being mismanaged at multiple levels. The real meaning of the bail-out package is this. Yes, good money is being pumped into the banks. Now it’s the responsibility of the RBI and the banks to act totally professionally.