Can we bank on our banks.

Speaking at Bancon, the annual bankers' conference in Mumbai, RBI Executive Director, B Mahapatra said," Till March 2011, things were manageable. We had around Rs 1.1 lakh crore ( trillion ) in recast loans, but now if you see, things are quite out of control. It has gone up to Rs 2.7 lakh crore. This is only CDR ( Corporate Debt Restructuring ) and if you put both ( CDR and bilateral restructuring cases between banks and companies ) together, maybe it might exceed Rs 3.25 lakh crore." This is scary stuff. Banks, especially those controlled by the government, are sitting on a mountain of bad loans and restructuring is one way of not showing the loans as losses on their books. Banks have had to increase provisions for these loans in case they do go bad, which has seen a fall in profits of public sector banks. Central Bank reported a loss of Rs 15.09 billion in the September quarter followed by Untied Bank of India with a loss of Rs 4.89 billion. Net profit of Corporation Bank has dropped by 96% from Rs 4.06 billion to just Rs 155 million while that of State Bank of Mysore dropped by 79.3% from Rs 1.45 billion to Rs 300 million. A lot of these loans maybe wilful fraud with the connivance of bank officers who are bribed to disburse large loans for commercial projects and the money is then diverted for personal use or for other dubious projects. The casual manner in which banks lend money was beautifully illustrated recently in Noida where a builder sold apartments to multiple buyers by arranging bank loans for them. The banks are now forcing these people to continue to repay their loans for properties they do not possess. A Deputy Governor of the RBI, KC Chakrabarty said that banks had written off Rs 1 trillion of bad loans in the last 13 years. He exposed a subterfuge called a " technical write-off " wherein a bank takes a hit on its profits by writing off a loan but continues efforts to recover it in courts or other forums. " We must move away from restructuring, there should not be any category called restructuring. The moment it is restructured, it should be declared as NPA, there should not be any technical write off..." he said. Public sector banks are owned by the government which means that they are controlled by politicians and run by civil servants. A bigger bunch of villains you will not see.