Page 41 - Banking Finance April 2016
P. 41
ARTICLE
Not watching Early Warning Signals: the Banks render a great support in identifying the
problems through various reports. It provides accurate
There cannot be fire without spark. No account turns NPA data and information which helps in regular monitoring of
overnight. They are bound to throw some signals in the accounts. Tools like CIBIL, CERSAI, availability of
advance, may be in the form of slowing down operations, information of properties through many State Government
depleting stocks, not complying with terms of sanction, non- sites, information available through face-book etc. if used
maintenance of assets/securities, disputes, pending taxes, in all earnestness will play a major role in not only acquiring
manipulations in financials, borrowers avoiding meeting quality assets but also in guarding them.
bankers, style of living etc. The list is endless. The skill in
the banker lies in identifying such signals in time and then Forgetting the fact that borrowers also keep a
acting upon them to find out the solutions. watch on the Bank:
Most of the times, such signals, though noticed, are ignored Don't ever forget the fact that borrowers do keep a watch
for conveniences. These conveniences, when I say, it may on the activities of the bank, how the Branch Managers
be for fear of losing business, fear of getting strictures from and Officers behave, how they carry on their duty, what is
higher ups, fear of some lapses coming to light, fear of their approach to work etc. In other words, Bankers do
transfer, and fear of losing promotions. As it is rightly said the due diligence and monitoring of borrowers, similar
"a stitch in time saves nine", little inconveniences in the way borrowers also do a sort of due diligence on Bankers
initial stages would avoid great inconveniences at a later and they also constantly keep a watch on Bankers'
stage. If this is understood in right earnest, then, I think, activities. Hence, it is necessary for the Bankers to be
proactively Banks will be able to catch up with the signals professional in their approach and give a signal in their
and take remedial actions in time. area of operation that they cannot be taken for granted.
Lack of seriousness in using Monitoring tools: While a Banker is duty bound to serve the customers/
borrowers, borrowers are duty bound to adhere to bank's
There are numerous monitoring tools available at Bank norms and also come upto the expectations of the Bank as
branches which, if used effectively, can help in monitoring regards to compliance with various terms of sanction and
the accounts. These tools may be stock statements, audit repayments. Most of the times, it is observed that
reports, various control returns, Credit Audit, account borrowers take advantage when there is a laxity on the
operations, inspection reports, financials etc. A little extra part of the Bank. Bankers need to shed "will do" attitude
care in obtaining and scrutiny of these tools will help the in order to protect the bank from the recalcitrant
Banks in knowing and analyzing the problems and then borrowers.
finding out the suitable solutions.
Under-utilisation of technology: Conclusion:
The operational software like Finacle in some banks and Above issues are only illustrative and not exhaustive. It
applications like Lending Automation solution (LAS) used by can be said that around 50% of the borrowers keep up to
their commitments and meet their obligations in time.
This segment is also sensitive and tries to protect their
reputation. Bankers are safe in their hands. Say around
10% can be considered as tough for the banks to deal
with. Rest of the (40%) borrowers can be either side
depending upon the Bankers' approach.
As later 50% (10%+40%)cannot be identified in the
beginning for strict supervision, Banks need to focus on
entire 100% of the borrowers when it comes to selection,
due diligence or monitoring with which the present menace
of 'Bad Assets' can be contained to a great extent.
BANKING FINANCE | APRIL | 2016 | 41
