Know your #PSU banks- how responsible are they with your deposit money ( #FD)

"According to a August 26 (2013) finance ministry note, the NPAs of public sector banks (PSBs) have gone up by 4.39 per cent with the total amount clocking over `1,76,000 crore. The amount is equal to the total budget of health, education and rural development of the country put together. The government owns majority stakes in PSBs and it is responsible for the money deposited in their accounts. If we add the NPAs of the nationalised banks, including the SBI group, the total figure is a whopping `3,50,000 crore, which could easily finance India’s military and internal security expenditure." ( Did you know this???)

The finance ministry has pointed out four major reasons - current macro economic situation, increased interest rates, lower economic growth and aggressive lending by banks - responsible for increase in NPAs. Among the measures to recover money from defaulters, the ministry has advised PSBs to appoint nodal officers for recovery at each zonal office and Debts Recovery Tribunal (DRT). The banks were directed to conduct special drives for recovery of toxic assets and to constitute a board-level committee for monitoring of recovery process. “The government has instructed public sector banks that write-offs should not be more than recovery,” the ministry said.

Source: Indian express

Money with PSU banks!

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?