{"id":31000,"date":"2018-10-27T11:45:16","date_gmt":"2018-10-27T06:15:16","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=31000"},"modified":"2018-10-27T11:45:16","modified_gmt":"2018-10-27T06:15:16","slug":"is-the-endgame-for-npas-in-sight","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/is-the-endgame-for-npas-in-sight\/","title":{"rendered":"Is the endgame for NPAs in sight?"},"content":{"rendered":"<p><a href=\"http:\/\/www.thehindu.com\/todays-paper\/tp-business\/is-the-endgame-for-npas-in-sight\/article22853468.ece\"><b>Is the endgame for NPAs in sight?<\/b><\/a><\/p>\n<p><b>Context:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The bank frauds involving Punjab National Bank (PNB) and the associated companies comes at the time when \u00a0the Indian banking system is already <\/span><b>reeling under the pressure of growing NPAs, or non-performing assets which will touch nearly Rs. 10 lakh crore by March this year.<\/b><\/li>\n<\/ul>\n<p><b>Reasons of bank frauds involving Punjab National Bank (PNB) and the associated companies:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The PNB scam relied on the existence of an unusual financial instrument, <\/span><b>the letter of undertaking (LoU).<\/b><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">These LoUs which are equivalent to providing credit and <\/span><b>should be recorded as contingent liabilities were not so recorded.<\/b><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Also, senior management and auditors did not <\/span><b>track these problematic transactions for years.<\/b><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The Reserve Bank of India (RBI) <\/span><b>did not monitor banks properly and created opacity with new financial instruments.<\/b><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The Finance Ministry <\/span><b>failed in its oversight and regulation.<\/b><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">And successive Central governments, including the present one, <\/span><b>did and have not done anything to address the obvious problems that were festering, a<\/b><span style=\"font-weight: 400;\">nd made them even worse.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The RBI may have been too occupied in counting old currency notes and dealing with the other damaging consequences of demonetisation to pay enough attention to its real job \u2014 <\/span><b>of bank regulation.<\/b><\/li>\n<\/ul>\n<p><b>Impact of bank frauds involving Punjab National Bank (PNB) and the associated companies:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Many analysts within and outside government have responded to these scams by pointing the finger at <\/span><b>public sector banks,<\/b><span style=\"font-weight: 400;\"> claiming that they are more <\/span><b>vulnerable to influence peddling and crony capitalism.<\/b><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The current mess has also become an excuse to <\/span><b>demand the privatisation of state-held banks.<\/b><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">But, poorly regulated private banks are even <\/span><b>more prone to scams and failure as the financial sector is rife with information asymmetries and market imperfections.<\/b><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Is the endgame for NPAs in sight? Context: The bank frauds involving Punjab National Bank (PNB) and the associated companies comes at the time when \u00a0the Indian banking system is already reeling under the pressure of growing NPAs, or non-performing assets which will touch nearly Rs. 10 lakh crore by March this year. Reasons of&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/is-the-endgame-for-npas-in-sight\/\">Continue reading <span class=\"screen-reader-text\">Is the endgame for NPAs in sight?<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[555],"tags":[],"class_list":["post-31000","post","type-post","status-publish","format-standard","hentry","category-test-1","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704625016},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/31000","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=31000"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/31000\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=31000"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=31000"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=31000"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}