Page 41 - Banking Finance February 2022

ARTICLE

A comparative study between Public and Private sector Banks: manipulation of Balance
sheet and dumping of
holdings by their
founders. This led to Yes
Bank loosing approx. 85
% in value and condition
of Bank run has
occurred. Chennai based
Lakshmi Vilas Bank also
faced sanctions from RBI
in 2020 because of
erosion of Bank's net
worth , low level of
liquidity and increase in
NPA's.

2. Manipulation of
NPAs :
In 2015,2016 and 2017
RBI caught Yes Bank for
under reporting of its
NPAs and continuous ever
Source: Aggregate Bank Credit of SCBs in India RBI data greening of bad loans in form of restructuring these bad loans.
In March 2019 Moody's estimated their NPA to stand at 8 %
Here we have tried to compare share of rural credit by (Which is very high rate compared to countries like UK,
different category of Banks i.e Public Sector Banks and Pvt Australia and Canada having NPA of less than 1% followed by
Sector Banks. We can clearly see that Public sector banks China, Germany, Japan and USA having NPA less than 2%).
are way ahead in that by their counterparts. This flow of Yes Bank was under reporting NPAs to the tune of 11000
increased and liberalised credit to rural areas had led to crores while Axis Bank was having divergence of Rs. 14000
increased growth in hinterlands which is unparalleled. In Crore and ICICI Bank was having divergence of Rs 5000 crore
Green revolution, White revolution and for all round growth alone in FY 2016.( Source. The Hindu business Line)
of economy since the nationalisation these Public sector
Banks have played a major part. Total no of PMJDY Accounts The Way out:
opened by Public sector Banks up to June 19 is 34.73 Crores Gunnar Myrdal a Swedish Economist and Nobel Laureate of
whereas private sector banks have opened a total of 1.26 1974 has advocated about government ownership in India
crore accounts (Source -PIB) thus giving a boost to financial as well as in Asian Countries. "Specifically, government
inclusion and rural prosperity. directors appointed by the government owner can better
represent creditors' interests, supplement incomplete
Issues with Private Sector Banks: banking regulation and supervision, and reduce
informational asymmetry between the banking regulator
1. Governance Issues: and banks." What we needed right now is some reforms like
ICICI Bank Ex MD and CEO Ms Chanda Kochhar is facing making banking free from dual clutch thus making it
investigation by ED (Enforcement Directorate) under the impossible to be used by governments to further their
money laundering case along with her husband Mr Deepak political gains. To make stringent norms to recover Bank's
Kochhar and Venugopal Dhoot of Videocon Group for alleged NPAs so that to avoid provisioning and stabilising capital
irregularities in sanctioning of Rs 1875- Crore loans to the erosion. Governments should provide more autonomy to
corporate group. On similar lines In Yes Bank RBI imposed PSBs boards to make their commercial decisions
moratorium on 5th Mar 2020 because of bad investments, independently.

BANKING FINANCE | FEBRUARY | 2022 | 41