Banks in Doldrums

6/4/2018

On the name of new plan to improve banks particularly the public sector Government banks are still in doldrums. The financial institutions that provide finances to all the sections of society are still in dire need of finances and budgetary capital support from the Government. Since long the Government provided capital support many time but the banks are still not in its own feet. Some of the top banks executives have created such a financial mess in trapping the industrialists into loan racket that it ruined both the industrial and business sector and the banks itself. The 9 public sector banks have submitted a new plan is not an improvement in the banking services but curtailment of it to effect economic measures in the expenditure. The public banks have suggested to close down some of its big branches and sell off its shares in the subsidiary companies out of 11 the 9 public submitted these 2 years plans. That also suggested cut in costs, reducing the size of branches, close down its foreign branches, reduce the corporate loans. The curtailment can never be considered as improvement and new plan. The word ‘new’ indicates the brighter side of the thing and curtailment refers to dark side of these banks. The Central Financial Ministry is considering the moves to reduce capital requirement of the banks. The cumulative losses of the banks coming upto Rs.73,000 crores in the financial year of 2017-18 and combined with bad debt has gone over Rs.85 lakh crores. The public sector banks are in deep distress and in red. The Government is pushing up the large banks like State Bank of India to buy small banks risking loans. The Union Finance Ministry has ruled out any fresh fund infusion beyond the Rs.65,000 crores that was announced as a part of Rs.2.1 lakh crores to the capitalizations. The banks are being persuaded to sell non-core holding including stakes in mutual fund and insurance and in real estates, which are in prime locations across the country. Ahead of the Reserve Bank of India decision on the banking rates into quarterly review the same of leading banks the State Bank of India, Punjab National Bank and private banks ICICI and Kotak Mahindra Banks have hiked loans rates by 10 basic point. The other banks are likely to follow suit. The banks are feeling shy of corporate sectors in advancing loans and moving towards small consumers loans. In long run it will harm end the industrial, commercial, business sectors and banks itself. The small money transactions are not be prime business and earnings of the banks.