A common man's wishlist for PM Modi to fix the rot in India's banking system
Prime Minister Narendra Modi has honoured the sentiments of the common Indian by assuring strict action against those engaging in financial manipulation and seeking "tight monitoring and surveillance" to guard against misuse of public funds at a recent business summit.
"We are taking, and will take, strict action against financial manipulations," the PM is reported to have said adding "those in charge of monitoring and surveillance should be on alert and financial institutions should discharge their duty responsibly".
Here is a wishlist for the PM to consider to help ensure that the huge machinery down the line falls in a near foolproof mechanism of monitoring and surveillance to avoid any recurrences of scams involving the PNB-Nirav Modi, Vipul Kothari, besides those that have surfaced in the past - Harshad Mehta, Vijay Mallya, Lalit Modi etc.
The first and the foremost responsibility is that of the banks that hold the hard-earned savings of citizens who repose their faith in the respective banks' conduct, dealings, values and ethics.
As per a recent report, bad loans by wilful defaulters (suit filed) have grown to Rs 1.1 lakh crore during 2013-2017. As much as 87 per cent of this outstanding amount of public funds is owed to the government-owned banks with the rest 13 per cent to the private sector banks.
The report is based on publicly available data of defaulters of Rs 25 lakhs and above. One hopes the banks concerned, including those in the private sector, will report details of all these defaulters to the PMO and the finance ministry without delay. The details of defaulters between Rs 10 lakh and Rs 25 lakh should also be included because a middle-class citizen takes almost a lifetime to save this kind of money, traditionally and ordinarily reposed in our banking system, after having paid multiple direct as well as indirect taxes. The details should also be shared on the websites of the respective banks as a matter of abundant caution to other lending agencies, individuals.
It is unbelievable that some of the authorisations for financial transactions in the government-owned banks have been delegated to clerical level, though this does not automatically mean that a bank officer may be less corruptible just by virtue of being an officer.
Both the processes of SWIFT authorisations and multiplicity of independent officials clearing the same need to be strengthened immediately. The private banking institutions too need to reaffirm such updates, wherever non-existent. At a time when all round digitisation of most records have been done and nearly 80 per cent of our population have been linked with Aadhaar besides the PAN data of all such borrowers, it should not be difficult for the affected or involved branches of such banks to upload such details.
The banks must also share their fixed plans for recovery of all these outstanding dues in a time-frame of maximum one year to both the offices of the FM and the PM.
Personal income and asset accounts of all officials of all the branches of such banks that have fallen a prey or vulnerable to such manipulations must be taken up for strict scrutiny for any disproportionate build-ups since 2013.
Most of us are aware of how audits are organised in both state and private sector organisations, most of these being heavily paid for apart from some other considerations in a few cases only (vouching for "excellence awards" and overhyped ratings by internal as well as some global organisations).
This calls for a similar scrutiny of the financial wealth of the auditors and auditing organisations too microscopically. The financial health of the chartered accountants who have handled the accounts of such branches also needs to be monitored afresh.
No offices other than that of the FM and the PM can venture to bell such cats. The sooner it happens the better it will be in best public interest of all the citizens diligently paying their direct as well as indirect taxes.
Details of all sensitive observations by the chains of auditors and chartered accountants who may have taken pains to alert the heads of such banking institutions must also be appropriately highlighted for recognising and rewarding their roles, even if at the end the manipulations did occur due to the clouts of majority having remained unconcerned to check the bunglings.
The basic aim of this exercise should be to eliminate the "ease of doing embezzlements" by the corrupt and the corruptible, and to restore public's confidence in the banking sector once again.
To become a $5 trillion economy, we surely need all such stringent checks and balances to be religiously enforced for India to land upon a model of surplus budgeting, disbursing bonuses to its citizens like what Singapore is doing today. With our tax net widening, such controls by themselves would become a reward for the honest tax-payers and law-abiding citizens.