Measures for Reduction in level of NPA of PSB. Hon. Finance Minister has recently in news saying the present level of NPA in the PSB are not acceptable.

The PSB as well as the Finance Ministry is concerned about the increase in level of NPA in recent years. Everybody must be trying to reduce the level of NPA in near feature and might be taking various steps to brought the same at acceptable level. A thought for the same the following measures has come to my mind which will help in reducing the level of NPA & if not reduce at least prevent the new additions to the PNA in coming period. Quick Mortality of Advance:

Presently if an advance account goes bad within a period of twelve months is considered as Quick mortality advance and the fixation of the responsibility and action ageist the persons responsible is undertaken. I think this period of 12 month for deciding the Quick Mortality is too short.

The tendency to save the new advance account by various methods for at least 12 months is observed. The period should be at least three years i.e.36 months. If the period is increased, the persons behind the sanction may not be there for a long period of 36 months and during the said period the account will be handled by more number of persons then the previous one, there by only sustainable and reasonable good advance will remain live for a period of 36 months. I also advised the PSB to prepare the data of all such account who fail with in the period of 36 months. The results will improve the outlook of such advance account.

The data of failure advance account of new NPA account should be as follows: Months 0-12 12--24 24--36 No. of A/cs Amts. In Rs. The results will help in monitoring and be an eye-opener for PSB and the Finance Ministry. Resturcted/ Rescheduled Accounts: The provision of restructuring the accounts was introduced by the Apex bank for the purpose of business failing because of the reasons beyond their control.

The restructuring is generally allowed in cases where unexpected import restrictions on raw materials, non-supply of coal by cancellation of coal mines licenses by the Apex court, labour unrest etc. If the restructuring is done for the reasons as above in many cases the same are helpful for the industry and economy as whole. However, there is also tendency to find out the reasons for rescheduling , restructing the advances so that the account can be saved temporarily form non performing asset to performing asset i.e. NPA.

BY this method those account which was suppose to die in a particular year get postponed there death in next two years maximum, as such account can not survive indefinitely on ICU. The data of the restructured /reschedule accounts period wise will be an eye-opener for the PSB. The Data con be tabulated as follows: Yr of Yr of NPA Recovery Reasons for Rest ruction/ Restructed between 1 & 2 Reschedulement. No. of A/c INR The above data will be definitely help in controlling the NPA level by better management, and avoidance of such NPA in future.

Importance on Monitoring and reduction of level of NPA than new advances: The level of NPA i.e. the percentage of NPA can be reduced by two ways, one by actual reduction in NPA by recovery of overdoes, and make the account again a performing asset by corrective measures and other is to increase the advance level their by the % of the NPA will reduced in comparison to advances. In majority of the cases, the second method is looked favorably as the monitoring, corrective measures and recovery in the already NPA account seems to be a difficult and a thankless task, while increase in advances will be seen as a thankful and target oriented task.

This thought process has to be corrected and the new mindset has to be developed. Their should be more importance given for the activity of reduction of NPA than the increasing the advances. Once the Eye on activity changes the change is automatic. The Bank people will more concentrated on recovery, monitoring, and corrective measures for NPA accounts than increasing the New advances.

This I think will definitely reduce the level of NPA in PSB Banks. All audits should be venture around to reduce the level of NPA. The NPA has very huge impact on the assets of the PSB and the at most Vital point for the working of the PSB. All other issues though not less important has not devasting effect on the bank performance as that of NPA. As such all Audits in the PSB whether it is Con current, Br Inspection,RBI , Credit Monitoring, and Statutory Audits has only one vital objective of reduction in NPA level, this subject should constitute at least 75% of the time of the auditors, the rest 25%.,

However, It is observed that, Auditors, attendance, their certification, discussions, hefty formats of the reports, Courses to be completed by the auditors & staff, Cooling period, rotations, time and other schedules, Number of man days to be devoted, and all other petty issues get more importance and than allowing them to freelance and to give their effective time to the reduction of level of NPA and its monitoring.

The Masala is getting the importance than Murgi, their by that centre is missing in the circle. Conclusion: Though the efficient working of the PSB and the effective monitoring by the Apex Bank the level of the NPAs are still under control and reflects no danger of failure of the PSB, I will be more happy of my Hon finance Minister should have said something more have to be done for the present level of NPA of PSB than saying the level is not acceptable.

@ CA.Satish C Badve F.C.A.D.C.M.D.I.S.A. D.I.T.L&W.T.O.(PartI)