The NPAs of our esteemed PSU banks are continuously on the rise. As the economy is turning down, the "true" picture is emerging.
While PSU do a fantastic scrutiny while providing loans to the normal public ( a typical home loan approval by a PSU bank takes 5X time when compared to private banks), the PSU banks seems to be succumbing with bad loans to "Powerful" folks.
While NPAs to a certain degree are normal in banking business, when it swells beyond a point, it is an indirect punishment to the depositors and other honest borrowers who pay back loans on time.
Last week, I was having a chat with a retired PSU bank executive. He had lot of tales on how the bank higher ups forced their subordinates in providing some loans to unworthy creditors. This was all the more evident when they had some superiors who had "bought" their top positions instead of "earning" them. This was one of the ways that they could get a "pay back" on their investment to get into a "posting". Sounds scary.
Thank God that not everyone is the system is corrupt or else no one would trust our banks. But the increasing NPA trend looks terrible and hope we see an end to this trend.
While we cannot do much about this , the one thing that we can definitely do is "punish non-performers"
Pull out all your money from banks that cannot control their NPAs!
how safe are bank deposits?