Mounting NPAs: What Went Wrong (WWW)?
Part-5: Overambitions/Greed of Entrepreneurs |
| To conclude my views over mounting NPAs , last but not the least key factor lies with the borrowers. The golden opportunity for Indian entrepreneurs in liberalised economy post 1991 was unprecedented. Suddenly many new sectors particularly with high capital intensive like telecom, finance, infrastructure, global trading, logistics and engineering opened up. |
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| The domestic players were further pushed by overseas players and thus the economy started growing day and night. Those who could perform were more greedy to grow faster and those who were left behind did anything required to manipulate. Lot of borrowers defaulted due to over ambitious planning and miscalculation. Greed of the borrowers sabotaged the banking system. |
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| They were aware of the prevailing legal system which acts as shield for the borrowers. Easy availability of funds, lethargic legal process, manipulative practices of the borrowers, corruption, growing economy and uncontrolled banking growth were the key factors for ever mounting NPAs. |
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Unfortunately, we have not yet learned the lesson from this and continue to ignore these facts. We believe in short term vision where infusion of funds in phases to take care of survival of banks is made by the respective governments. |
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A detailed Corrective Action Plan (CAP) is required at the highest level to avoid any future growth in NPA which is possible only with honest and intelligent actions. In our country top 20 borrowers have exposure to the extent of 20% of total lending portfolio which in itself very sensitive issue and needs to be handled very judiciously. |
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I will share my views on various suggestions to control NPAs in next posts. |
