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Concentration of credit - Part II


Ramachandran Menon


 I refer to the article on Concentration of credit which appears in your esteemed website. Mr.Jain has correctly touched upon the point and it is very timely and appropriate to write on this subject.

When several new projects are coming up, some of the prominent people in the aviation sector are pushing around for making their planes fly. Had the lending bankers been a little more cautious to ascertain why money is not coming in in right time when the borrower was flying all his planes in all lucrative international routes, they would not have landing in the present predicament. Lack of monitoring lead to all this calamity. Gulf sector is the money spinner for all airline companies. Foreign companies are making huge profits and it is a question to be asked why our companies are making loss.

Real estate is an area where there is a trend for over exploitation. Real estate mafias have done so much damage to the country which the society has not understood. They are responsible for the cost of building materials and the wages of skilled and unskilled labour employed in the building industry. Eventually the cost of construction goes very high and the ordinary middle class man cannot afford to buy a flat or a house.
Had there been some restrain in financing the real estate business, the present predicament would not have arisen. Bank with mounting bad loans in the real estate sector are in the process of finding scape goats.

Govt plays a double standard particularly in monitoring advances to priority sector advances. The new generation banks never open branches in rural areas and hence their advances to agricultural sector may not be significant.
Some banks categorize their gold loans as agricultural loans after taking some undertaking from the the borrowers. Hood winking the govt. rules is the order of the day.

Khandelwal committee had recommended that all officers and clerks should be computer capable. Why highly qualified computer professional should come to work in a bank? Even if he comes he goes on searching for better jobs in other sectors and he gets selected very easily. Every other industry gives better conditions for their employees than banks to their employees. Salaries offered to campus recruitees are unbelievably sky high. It is shameful how the banks treat their retired employees. They seem to forget that a retired employee still keeps loyalty to the bank he served during his work life and work as a salesman. But banks consider their employees as a burden and never found in them a very positive work force. Of late banks have become the last choice for a professionally qualified graduate.


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