Wednesday, May 21, 2008

O.P.Bhatt needs to keep his job

Before you could say spunk, SBI blinks.

Yesterday, SBI chief general manager Shyamal Acharya, confirmed that the bank has temporarily discontinued giving loans to farmers for purchase of equipment and said the decision was forced by the high non-performing assets (NPAs) in the segment.

He said NPAs under this head had gone up to 17% of the total outstanding amount of Rs 7,000 crore, and such a high level of NPAs was not sustainable. Loans for tractors, combined harvesters and power tillers constitute a small portion of the loans given by the bank to the farm sector. He said that while loans given against such equipment add up to just Rs 7,000 crore, total lending by SBI to the farm sector is around Rs 43,000 crore. NPAs in the farm loan segment as a whole are just 7%. This is higher than SBI's overall proportion of NPAs - barely 3% on total loans of Rs 4,22,181 crore as on March 31, 2008. However, it is significantly lower than the level on farming equipment loans.

And today, they regret. See how SBI deputy MD & group executive (rural & agri business) Anup Banerji covers the management ass. He says the decision to stop lending was not taken by the board. It was a strategic decision taken by the business unit of the bank. “No communication was given from the ministry to resume lending for tractor loans. There has been no pressure from political parties or the government to roll it back, it was the bank’s decision to do so. Given the reactions the decision evoked, we reviewed it and have decided to continue lending.” When you have a gun held to your temple, that’s how you speak !

SBI chairman O P Bhatt too wants to show obeisance to masters. He too regrets the bank having issued that circular. Poor Mr.Bhatt needs to keep his job until he gets hired by a private equity just as his predecessor A.K.Purwar, currently with Nicholas Piramal Private Equity Fund. Who is he confronting? Even P.Chidambaram couldn’t overrule the whims of Sugar Daddy who is the architect of loan waiver. That’s how he rules Baramati and its voters. By helping his cronies treat bank loans as Daddy’s gift, he let them have those funds for keeps so that he can have recourse to it to fund his and his nephew’s election expense. Now his daughter (Ms. Supriya Sule) too has joined in. No code gets violated and Election Commission cannot raise a finger. Look at Mayawati. Has so much of money to run a mighty sovereign. Ask for source – all *gifts* from Dalit cadres that don’t have money to buy even a decent meal, yet marshal enough resources to shower gifts on their leader to *uplift* the downtrodden –as if they are perched somewhere up.
Why can’t SBI plead a software bug or shortage of forms or heavy load of applicants (because of the heavy rush to borrow since they don’t have to repay) to explain away non-processing of farm loans? They should learn from their PSU oil marketing cousins. With their backs to the wall, Indian Oil and its sister firms started clipping sales of non-branded fuels in Metros and 16 other cities and stopped giving new cooking gas connections.

Oh yeah, I did digress. But I think it’s par for the course. Once in a while I need to let out my steam. I am shocked by the way our PSU banks and Oil Companies are being run. Instead of letting them align with commercial reality, their managements are browbeaten into submission, punishing the public shareholders that unfortunately end up owning the piece of shit. I am angry just as you are. Know why? I am no farmer and hence no loans to skip. Too bad.

That said, “spunk” is hardly the expression associated with PSU bankers. They are all wimps. Meanwhile as a depositor, you may brood at lower interest rates, as a shareholder you could sulk at piffling dividend yields and capital appreciation? Not until the next tide lifts all boats (that has no connection with earnings growth) – just in case if you’ve survived the recent bust and mounting fuel bills!


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