TIPS FOR INTERVIEWS

Interviews are conducted for a fresh appointment or for a departmental promotion. These are mostly held after successfully qualifying a written test and in certain cases of promotion after becoming eligible for the same depending on your length of service, qualification, performance, and annual performance reports etc.

Candidates must understand that the final merit would depend upon the marks they obtained in written test or for their performance in the department they have worked, plus the marks they obtain in the interview. Generally, the ratio of marks between the written test/performance to interview is 80:20. Your chances of success are therefore 4 times higher on your performance in the written test as compared to your performance in the interview. You should, therefore, be more concerned about your written test/performance, of course not belittling the importance of interview. An example below will make things more clear.

Suppose a candidate X secures 60 marks out of 80, in written test/performance and he for certain reasons fares not so well in the interview and is awarded 10 marks out of 20, as compared to candidate Y who fares very well in interview and secures 18 marks but has got 50 marks in written/performance test. Who will be on the top in merit list? Definitely X in spite his less score in the interview. So please work more seriously for the written test. However, interview definitely enhances your chances of success so also needs to be taken with equal seriousness.

Following tips will help candidates to successfully face an interview:-

  • Your desired level of knowledge and intelligence/performance is covered by the written test/departmental assessment in case of promotion. The interview is conducted to judge your personality, traits, aptitude, behavior, shrewdness, understanding of problems, innovative attitudes, patience, confidence level, the way of talking, convincing power, effectiveness and clarity in tone and speech, level of general knowledge and level of alertness etc. etc. All such things cant be evaluated by a written test, so interviews are conducted.
  • While going for an interview, please please stop discussing any issues regarding the interview with your co- interviewees at least half an hour before your turn for the interview is about to come. Remain silent, cool and composed during this period.
  • Generally, people become tense at the last moment and all their knowledge sometimes gets evaporated because of this last minute tension. Take a glass of water, gently rub your both hands on your face, neck, and ears. Take three to four deep breaths and feel easy before entering the interview room. This will ease your tension.
  • Please understand that you are going for an interview before a group of intelligent people from whom you may learn a lot during your interactions.You are not going before a police team for an interrogation, then why fear? Go with full confidence.
  • When the bell rings for calling you in, please enter the room gracefully and wish all committee members with a smiling face. Don’t say “May I come in,” as the ringing of the bell itself is a permission for you to enter the venue. Don’t sit on the chair unless asked to do so.
  • When asked to sit, sit straight facing the interview committee. Don’t lean against the back of the chair. Don’t sit cross-legged. Don’t rub or close your hands or make fists. Keep your hands comfortably on your thighs and use them to make natural gestures while making a point.
  • Remain composed and confident with the natural smile on your face. Don’t look here and there. A good interviewer will make you comfortable by asking about you. Keep eye contact with the person who is talking to you but don’t stare at him. You can read many things from his body language and act accordingly. Give the precise answers.
  • Go well prepared about the subjects you have studied or the pieces of training you have undergone, as you may be asked about them in the interview. Simply saying that it was long that you studied the subject or underwent training shows how poorly you have taken your studies and trainings. It creates an impression in the mind of interviewing committee that you would take the job assigned with same lack of seriousness as in your studies and trainings, and that will be a negative thing for you. Try to recollect things and try to explain whatever you remember.
  • You may be asked as to how you would be useful to the organization you are going to join if selected or how best you would deliver in case promoted to a higher cadre. Here think for a while and put up your proposal in an effective and convincing manner. You should go prepared for such questions. Simply saying that you will work hard with dedication shows lack of innovative ideas. Give something solid.
  • Remain attentive and understand the question well before reacting. Don’t overreact or start lengthy discussions. Don’t fumble.
  • Even if you don’t know the answer to a particular question, never get tense. You are not supposed to know everything. Don’t guess and start beating around the bush, instead politely say sorry and depending upon the atmosphere and mood of the interviewer, respectfully request him to clear the point for updating of your knowledge.
  • Speak clearly with normal speed and pitch which is comfortably audible to the interviewer.
  • When you are confident about the answer you gave, please stick to it. Sometimes interviewer may try to confuse you just to check the level of your confidence. Stay firm on your stand with confidence and respect. Always remain polite. Don’t falter or get perturbed. Your confidence and calmness would make you face the interview well.

After the interview is finished the chairman of the committee will signal you to leave. Don’t start begging for the post by putting up adverse conditions of your family or chances you have already missed. This shows lack of self-confidence and is against the general ethics. No one is going to give you extra marks on such issues. Just stand up, wish all members respectfully, and gracefully walk out. Don’t rush or stumble, as all your moves are under the observations of the interviewing committee.

 

HOW AND WHERE TO INVEST SAVINGS

THE YIELD OR THE RETURN ON INVESTMENT IS DIRECTLY PROPORTIONAL TO THE RISK YOU TAKE. SO YOU SHOULD TAKE A WELL CALCULATED RISK AND IT DEPENDS UPON YOUR OWN JUDGEMENT AS TO HOW MUCH RISK YOU ARE PREPARED TO TAKE. PLEASE AVOID TAKING HIGH RISKS UNLESS YOU ATTAIN EXPERTISE IN MARKET FORCES

Once you are in the habit of saving, you should start investing in different schemes of different financial institutions. Four things are to be taken into consideration before deciding to park your saved funds in different schemes. Financial institutions/mutual fund companies have all types of tailor-made schemes for different maturities and you can choose those which suit your requirements. The issues to be considered before investment are:-

  • Safety of your funds.
  • The risk involved or quantum of risk you are prepared to take for your investment.
  • The rate of growth of your invested funds.
  • The maturity period of scheme you intend to invest in.

You may have bulk funds available or a regular monthly salary/income. Options available for investment of bulk funds in order of safety and risk are:

  • Sovereign Gold bonds.
  • Real estate.
  • Banks term deposits.
  • Debt linked instruments of the reputed mutual fund company.
  • Equity-linked instruments of the reputed mutual fund company.

For savings out of regular monthly salary/income, the available options are:

  • Saving bank account of banks
  • Recurring deposit account of banks
  • Debt linked SIP(Systematic investment plan) of the reputed mutual fund company.
  • Equity-linked SIP of the reputed mutual fund company.

THE GOLDEN RULE OF INVESTMENT

THE YIELD OR THE RETURN ON INVESTMENT IS DIRECTLY PROPORTIONAL TO THE RISK YOU TAKE. SO YOU SHOULD TAKE A WELL CALCULATED RISK AND IT DEPENDS UPON YOUR OWN JUDGEMENT AS TO HOW MUCH RISK YOU ARE PREPARED TO TAKE. PLEASE AVOID TAKING HIGH RISKS UNLESS YOU ATTAIN EXPERTISE IN MARKET FORCES.

Then there are high-risk options such as Equity market. It is always advisable to avoid investment in equity market directly unless you fully understand the nitty-gritty of the Equity market as well as the movement of local as well as world economies and political climates. Investment in the equity market is advised through equity-linked mutual fund schemes.

Ponzi schemes promising very high returns don’t have any sound base and support systems and people have lost their fortunes in such schemes. Don’t get lured by such schemes.

RECENTLY BITCOINS HAVE COME INTO GLOBAL MARKET WHERE PEOPLE HAVE ALTHOUGH MADE EXTORBITANT PROFITS YET IT IS HIGHLY RISKY TO INVEST IN BITCOINS BECAUSE THEY DO NOT HAVE ANY BASE. NO GOVT. OF ANY COUNTRY HAS RECOGNISED BITCOIN AS A SOUND INVESTMENT.
IT IS CRYPTOCURRENCY HAVING NO SUPPORT. IT’S BUBBLE CAN BURST ANY TIME RESULTING IN VERY HEAVY LOSSES, SO DONT BE LURED BY SUCH RISKY INVESTMENTS.

60% of your net monthly saving is advised to be invested in reputed mutual fund companies in the ratio of 50% in debt and 50% in equity-linked SIP or Recurring deposit scheme of banks for a period of 15 years. 40% of net saving every month be kept in saving bank account. Amount so accumulated in this account be converted into term deposit of 50 thousand or one lac or 5 lac as the case may be for the period of your of your choice. Keep on renewing the term deposits on due dates or invest in any high yielding scheme of financial institutions. You should not keep all eggs in one basket.

And above all, there is an investment which we should never forget to make whenever we receive an income or salary and that investment is CHARITY for a good cause. The amount of investment/donation depends upon your own will; no bindings. However, some religions have mandated a percentage of income as charity, like Sikhism, which advice to donate 10% of your income in the charity called DASWANT and in Islam the limit is 2.5% called ZAQAAT. Charity purifies your income provided it is out of honest means, and purely organic in nature. Any income out of dishonest means, corruption, cheating or any illegal means is inorganic in nature which may infect your organic and healthy income. No charity of whatsoever amount out of such income can purify your wealth. No one can get peace of mind in life out of such income and it always leads to problems and problems only.
Slowly and steadily you will accumulate enough wealth to take care of your future needs.

Till you are in active service/earning stage, you should continue parking your savings in growth schemes and meet your social and moral responsibilities. And once you retire, better keep saved funds in monthly yielding schemes of financial institutions to augment your monthly income and live a peaceful life with financial independence.

WHY AND HOW MUCH TO SAVE

Saving is a habit, a technique which should be taught from the very childhood lest it becomes too late.

In olden days parents used to give the earthen piggy bank to their children and advise them to put whatever coins they get from their relatives and create an amount which could suffice them for spending during the village fair or on birthday. This was to inculcate a habit of saving as well as making them understand the value of money and training them to become self-sufficient for meeting any future expenses. This culture has either evaporated or lost its importance because of the changing times and lifestyle of people.  Savings are as important in present times as were before. We save not only for ourselves but for the nation as a whole.

Afterall what is saving? Should one wait till he has enough?. Enough is not an absolute term it is comparative.Enough will never come to those, for whom enough is too little.One should, therefore, start saving from the day he receives his first salary/income.For that, he has to plan his expenses in such a way that they are always less than the monthly salary/income.Saving is income minus expenses, and that should always be positive.How beautifully one manages this is his individual effort and skill.One can manage his expenses as he likes and at the same time, there is no limit to the quantum of expenses one can make. So one should try to cut his coat according to his cloth so as to save something for future.

There are some urgent future expenses which one has to meet such as for the education of children both primary and higher/professional, building a dream house, buying a car, marriage of daughter or son and for meeting any other unforeseen eventualities.

With the passage of time, your income/salary may increase and so will your expenses.The size of family and their needs will also increase. You have therefore to manage all this and save a suitable percentage of salary/income every month so that you can build enough portfolio to take care of all your future requirements.  A proper planning in this direction can make your life easy at the time of meeting your social obligations.

At various stages of life and career, you have to face different problems but you have to manage in such a way that you continue to save regularly without any break. Following are various stages and circumstances through which one passes in life after starting his career/business.

  • When bachelor you are single and can manage to cut your expenses by living as paying guest or sharing accommodation and joint mess with friends and colleagues.Please start saving from day one.Don’t wait for tomorrow as that will never come and ultimately you will get into deferring your saving plans. By continuous, regular and suitable savings you can build handsome amount to meet your future needs.The percentage of savings at this stage is the highest.

SAVING SHOULD ALWAYS BE FROM HONEST EARNINGS.DONT GO FOR QUICK BUCKS BY RESORTING TO CORRUPTION, MALPRACTICES OR SPECULATIVE ACTIVITIES.PLEASE REMEMBER ANY INCOME EARNED OUT OF HONEST MEANS IS AN AMBROSIA/NECTER AND INCOME BY DISHONEST MEANS IS LIKE NARCOTICS. YOU WILL GET ADDICTED TO IT ONCE YOU TASTE IT.THIS WILL NEVER GIVE YOU PEACE OF MIND BUT TROUBLE, TROUBLE, AND TROUBLE ONLY.
AN HONEST LIVING IS THE BEST LIVING.

  • You will get married.Your income may increase depending on whether your spouse is an earning hand.your expensed will increase as now you cant afford to share accommodation and mess. Neither can you be a paying guest? Your percentage of saving is bound to decrease.
  • You will have your lovely sibling/siblings and for their maintenance, you have to spend a part of your income resulting in a further reduction in percentage in saving.
  • Schooling of children, higher education, professional education and meeting their needs and inspirations further reduces the percentage of savings. This is the most crucial part of your life.You have to acquire your dream house, buy a car or other items of utility and raise loans from financial institutions. You must do this to save any escalation of cost on these urgent requirements. The EMIs on such loans may take a toll on your take-home income but will not be having any effect on your percentage of savings.Interest on housing loan will be deducted from your total taxable income while calculating tax so you save a lot of tax thus increasing your net income. The amount of repayment qualifies for investment in tax saving instruments. You have acquired an asset by raising a loan for which you pay EMIs which otherwise you would have to acquire out of your savings at a later stage. EMI, therefore, is not cut on your percentage of savings.
  • You may or may not be in earning service by the time your children are settled.You should be able to carry on with life comfortably and independently.Your savings, pension etc.should be enough to meet your needs.

You should always try to help and give and never expect to receive from others. Leading a simple and comfortable life should be our motto. A complex lifestyle is always troublesome and devoid of peace of mind. Following table suggests what the percentage of your savings can be at different income levels, different stages of life, the different set of locations and size of the family.

Note: Salary/income shown in the table above is net after statutory deductions such as income tax medical insurance etc.Percentage of total saving includes deductions on account of life insurance, EMIs for loans taken( excepting consumption loans), provident fund, NPS etc.

 

GOOD GOVERNANCE

Governance is a set of processes, policies, and actions which any government or an organization takes for overall and equal development of its peoples and of all the stakeholders. Every segment of an organization or department of Government, State or Central, which is responsible to run the government or an organization has to ensure that all the stakeholders are getting equally benefited and that too in time. They have to ensure that the developmental projects are executed in time, people get justice in time, and life becomes easier with every passing day. A good governance ensures equal distribution of resources amongst all section and categories of the stakeholders.

The tests of the good governance are:-

  • Whether there is a visible improvement in the living standards of the stakeholders.
  • Whether there is a comparative decrease in time in delivery of services in all sectors.
  • Has the gap between expected services and delivery of services narrowed down? If it has, it is good, but in case it has widened it is bad governance.
  • Is the gap between the highest income and lowest income decreasing? If decreasing it is a result of good governance if widening it is otherwise.
  • Are all the stakeholders happy to carry on with existing governing systems or are fed up with that and want a change?

Is this really happening on the ground? The promises made, the policies announced, and the rules made, are only on the papers.Nothing much is done on the ground.

The stakeholders have to decide for themselves whether they are getting the benefits of good governance or not.

It is observed that those at the helm of affairs bother more for themselves and less for the stakeholders, the result is total chaos in the governing system.
This happens due to lack of accountability, nonseriousness in accountability or poor accountability and absence of deterrence. If we look at what is happening on the ground we find that those responsible for providing good governance and ensure equi-distribution of resources among all are bothered for a multifold increase in their own incomes and facilities, leaving the stakeholders to fight for the peanuts.

The projects of national importance are delayed by a period which is much more than the period projected for completion of the same. The developmental schemes for the masses are only on papers and very little reaches the ground. There is hardly any visible change or any improvement in the living standards of the people in the weaker and neglected sections of the society even after their three generations, and the gap between the poor and the rich has widened to an unimaginable extent. Delivery of justice has not picked speed in spite of so much modernization and it seems as if it has been left to the fate of the masses. The graph of incidences of frauds, crimes, corruption, and intolerance is on the rise. The possessions amassed out of corruption and the crime are now being recognized in the society with the esteem rather with disregard. This is a very disturbing attitude of the society as a whole.

The tolerance and brotherhood amongst different communities are decreasing and need to be taken seriously by the concerned governments, all political parties, religious heads, and organizations as well as by all the stakeholders. All religions preach peace, brotherhood, and love, as all of us, are basically sons of the same universal Father, to which we call by different names; God, Ishwar, Parmatma, Allah, Khuda, Waheguru etc. All of us believe that there is only one Supreme Being and we all are His children. We have therefore to find out the root cause of hate and intolerance, identify the people responsible for spreading the same and ignore them. This dirty trend needs to be discouraged by all concerned at all levels.

There is, however, no dearth of people of integrity, who keep on working tirelessly for the welfare of mankind. There is definitely a silver-lining behind the black clouds. These people are working tirelessly to improve governance and we need to encourage and support them in their endeavor and not to lose hope. Not only the people at the helm of affairs but everyone associated with governance has to work in a missionary mode to improve the lot of the children of the lesser God. THERE IS NO OTHER WAY OUT. Everyone has to understand the responsibility and work with dedication. Corporate Social Responsibility or Governmental Social Responsibility is not sufficient unless there is a sound Individual Social Responsibility in place.

Management of NPAs -Some recovery techniques.

When a loan account becomes Non-performing it is a headache and signal of deteriorating health of a bank. Any addition to this portfolio raises anxiety for the institution so this needs to be kept at a minimum level by effective recovery techniques.

Although it is always better to avoid slippage of accounts to NPA category by proper follow-up because ‘PREVENTION IS ALWAYS BETTER THAN CURE‘ but still some accounts do slip to NPA category because of one or the other reasons as already discussed in the earlier blog.

RECOVERY METHODS: We should study the NPA portfolio carefully and plan a strategy in a scientific manner, categorizing the accounts in order of ease of recovery.

Following are some suggestions at operational levels:

  1. One should not lose sight of the renewal date of the DP notes and no such account be allowed to become time-barred by limitation. So necessary recovery proceedings are initiated within the limitation period of the particular loan account. Fresh DP note, acknowledgment of debt or a credit into the account by the loanee with a credit slip duly signed by him will extend his limitation period. If this is not possible despite all efforts and persuasions the lawsuit be filed in the court of law well before the date the limitation period expires.
  2. After categorizing the accounts in order of ease of recovery, first, handle the accounts which can be recovered easily or by comparatively fewer efforts than in case of other accounts.
  3. There may be some freshly slipped account to NPA category where only a few installments or some interest is pending for payment. A recovery of that small amount can result in the upgrading of the whole amount of NPA account. All such accounts are given top priority as less effort produces comparatively much better results.
  4. Some NPA accounts of persons of good repute and standing can be recovered by hot persuasions. Keep a regular contact with these persons and their guarantors and encourage them to pay bank’s dues and save heavy legal charges and embarrassment of the courts to which the bank may be forced to go in case of nonpayment of its dues.
  5. Regular contact with the defaulter and his guarantors is a must. The recovery team members should be polite, persuasive but firm in their pursuit of recovery. During any discussions with the concerned parties, space should always be kept for further discussion. Bank’s DEFAULT IS A BIG SOCIAL STIGMA and many people pay if properly approached to avoid this embarrassment in society due to the regular visits of the recovery team.
  6. As there is always a shortage of staff in branches and it is difficult to spare people to form a team so banks should build recovery teams on a CLUSTER MODE where staff from few branches in the cluster join and work for all associated branches. The leader of the team should be rotated depending upon the recovery of a loan of the concerned branch because leader from the concerned branch can better understand the customer and his default account. If possible, some Female Staff should also be associated with recovery teams as this will help in avoiding many embarrassing situations which the recovery teams face during their recovery drives.
  7. The defaulter should be given reasonable time and encouraged to repay the due amount.
  8. There are also some HARD NUTS TO CRACK i:e the WILFUL DEFAULTERS and habitual defaulters they are real sharks and deserve no leniency so need to be dealt ruthlessly.
  9. Wherever merits demand suitable settlements can be made after negotiations. The negotiating teams should be experienced and skilled in this field.
  10. Publication of photos of defaulters and their guarantors, reporting to CIBIL as per authority and consent already obtained during the execution of legal documents at the time of releasing loan be resorted to on the merits and demerits of each case.
  11. In case of Wilful and hard type defaulters, negotiations should not be held in the cozy chambers of the bank’s executives but in the chamber of recovery officer. These chambers should not have comfortable chairs and sofas but ordinary chairs. The walls of the chambers be painted with recovery slogans and pictorial mages showing the bad effects on the reputation and standing of a defaulter in the eyes of society and public(try to corner them psychologically).
  12. The recovery officer should not sit in the chamber to welcome the defaulter when the defaulter is expected to visit him. Someone else should guide him to the chamber and let him sit there for some time and get acclimatized with the environment of recovery chamber. Recovery officer should make the defaulter and his guarantors understand the ramifications of legal recovery proceedings and costs involved. They should be advised and encouraged to repay the loan to avoid legal embarrassment.
  13. Negotiations be held with defaulters on merits of each case and nothing less than the realizable value of security charged to bank be agreed to be accepted in settlement of the account as this creates problems in the long run and sets the wrong precedence. As already said in the foregoing paragraph that during negotiations the position of the defaulter is that of a SHARK and that of the bank as a TEDDY BEAR. By skilled negotiations, you should be able to reverse this position. Please note that negotiations should never end up in a deadlock and scope should be always kept to restart the same again after some time.
  14. There may be some cases where chances of recovery are dismal and the value of the security has diminished to worthless level. Do not waste your time and energy on such cases and let the management take a call on the fate of such accounts.
  15. Recovery camps/Recovery fortnights /special recovery drives can be arranged at different levels to settle accounts. Defaulters should be encouraged to avail the opportunity to settle the account at some concession which can be decided by banks during these programs.
  16. The recovery under SARFAESI Act, through debt recovery tribunals, bank courts, other legal methods are already well defined and should be resorted to wherever required under the guidance of legal cells of respective banks.
  17. Recovery of Rural area defaults of comparatively small amounts are handled with compassion. Village heads, Sarpanch, and Village level workers (VLWs) should be involved. They should be told that more default in a village or an area is a factor stopping the bank from more lending in the area. These people can have great influence on defaulters.

RECOVERY NEEDS A MISSIONARY APPROACH. A casual approach is just a formality and brings no results.

THE TOP MANAGEMENT must provide all guidance and support to recovery departments because they are the people who are front warriors without them the mission cannot be accomplished. Only they can help them to sweep out the Junk from the system…….

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Bank’s NPAs. Causes and Remedies.

NPAs are a challenge for the survival of banking industry across the globe, and especially for the banks in the developing countries. The cause of concern for these nations is the rising trend in NPAs which is spreading like an epidemic. Unless this trend is contained and curtailed, the fear is, failing or slowing down of economies of the affected nations.

NPAs adversely affect the health of banks and the economy in many ways.

  1. They stop creating any income for the banks, that is why such assets are called non-performing assets.
  2. They eat away a portion of income the good advances i.e. from performing assets and other sources of income because of the provisioning to be made against the NPAs, thus reducing the overall profits of the banks.
  3. They tell upon the reputation of the bank. The value of stocks comes down thus adversely affecting the investors which ultimately is a cause of discouragement for the public to contribute to such a bank’s  deposits and resources.
  4. It badly affects the morale of the employees because any reduction in profits deprives the staff of expecting any incentives and career growth.This trend if sets, is a very serious matter and a big cause for losing a battle.
  5. The economy of the nation suffers because the banks cant support the economic activity due to the shortage of loanable funds as the resources get blocked in the NPAs.
  6. The capital adequacy ratio falls below the required standards and in order to meet this shortfall, the banks go for capital raising through the public issue which in such depressed condition and loss of reputation becomes difficult to be fully subscribed because of poor response from the market. This forces banks to manage capital at discounts rather than premium. The cost on account of managing public issue is huge, and another cut in the profits of the bank. However, in case of public sector banks, the central govt inducts capital out of its own sources to bail out banks. The recent case is the induction of more than two lac crores of rupees by Indian govt in the capital of public sector banks to bail them out of the crisis.

THE INSTITUTIONS WHICH ARE CONSIDERED AS THE AGENTS OF DEVELOPMENT AND SOURCE OF RESOURCES FOR THE EXCHEQUER ARE BECOMING A BURDEN ON THE GOVT.

This amount could have been used for the uplifting the economy but instead, it has affected the growth of it.  How long this can be allowed to go on. Can any economy afford to have such a state of affairs where the institutions meant for its development become a burden on it? They have to stand on their own legs and support the economy instead. This serious issue needs the focused attention of the management of respective banks as well as of the govt.

CAUSES OF NPA’s

Bank’s assets turn NPA for genuine as well as for bad reasons. These need to be timely identified and remedial steps taken to avoid them. Once an asset becomes NPA it becomes difficult to upgrade or recover it. This puts an additional burden on the resources of the bank as well as on the workload on the employees whose maximum energy and attention get consumed on such cumbersome work rather than on the development of the main business. The genuine and unavoidable causes for NPAs are (A) change in govt. policy. For example ban on plastic bags affected the plastic bag industry and loans in such industries went bad. (B)change in the lifestyle of consumers effects the industry whose products go out of fashion. (C)Fall of natural calamities. (D)Wars and prolonged public disturbances. These cant be avoided, and assets becoming NPA because of such circumstances need to be dealt with by the concerned Govt. and banks with compassion.  The BAD CAUSES are:

(A) Defective and poor appraisals of loan proposals.

(B) Political pressure/other considerations for sanctioning of loans.

(C) A mad rush/run to meet the loan targets unreasonably set by the management.

(D) Handling the proposals both at appraisal, sanction as well as at disbursement level by inexperienced and untrained staff.

(E) Diversion of funds to projects other than the ones for whom the loan actually sanctioned.

(F) Poor pre and post disbursement followup.

(G) Compromising with the quality of security and its realizable value in white money.

(H) Avoiding actionable steps at the early stages of indication of slippage to NPA category.

(I) Lack of proper accountability of staff at different levels associated with the appraisal, sanction, and disbursal and follow up of loan cases.

(J) AND above all is the wilful default by the loanee especially in case of big advances.

(K) It has been observed that proposals, especially large ones having multiple banking arrangements or consortium financing, are not appraised at individual bank’s level with much care as should have been applied. Generally, member banks copy paste the proposal of the leader bank. Something suiting a certain bank may not fit well into the systems of any other bank. Every shoe does not fit every foot and may pinch at the end causing a trouble, So banks should individually make their own assessments about the suitability of proposal. An account in such an arrangement going NPA in one of the member banks infects all banks. Every tier in the sanctioning process from branch to the board level must add value to the proposal.

REMEDIES

  • Political interference can be neutralized by effective appraisal without compromising the quality of proposal and security. The only weight-age to be given to such pressures should be limited to early and smooth sanctioning of the loan.
  • Targets for advances be set in a scientific manner and properly trained staff need to be put on appraisals. Creation of specially trained staff requires proper planning and sustained efforts need to be made to upgrade their skills. There should not be square pegs in the round holes or otherwise things will end up in failures.
  • Proper legal documentation and creation of legal charge be got done before releasing even a single paisa of the sanctioned loan. Disbursal should be need-based and in phases. Post disbursement inspection must be conducted on and after every phase of disbursement in order to check any diversion of funds.
  • All assets charged to banks must be got properly insured and diarised to be renewed on due dates. Value of securities be got assessed at suitable intervals of time. Disbursing authorities necessarily need to follow installation and the timely start of a project as any delay may result in cost overruns thus making the project unviable. This may result in a loan into going to NPA in the beginning itself.
  •  All statutory/necessary permissions, clearances, licenses must be in place before disbursal of loan.
  • THE CONTROLLING AUTHORITIES MUST KEEP AN EAGLE’S EYE over the big loans and LARGE PORTFOLIOS and guide the operating levels at every stage. Pre and post inspection and controlling authority’s guidance should not be only on paper but on the ground. These are not the only safeguards as there may be many others depending on each case.