The Irony of Corporate Excellence
Public Sector Banks (PSBs) in India have shown phenomenal
growth since their formation in 1969 and account for nearly 70% of the
country’s banking assets against 30% in
other emerging economies .Yet they also have accumulated huge non-performing
assets (NPAs) over the years. Their volume stood at Rs. 2.67 lakh crore as on
31.3.2015 from 2.16 lakh crores at the end of the previous year and accounted
for 5.2 % of their advances ( 4.72% in the previous year). Non-performing and
restructured loans are expected to exceed Rs. 500,000 crore . Finance Minister
Arun Jaitley has called this increasing volume of NPAs as “unacceptable”.
NPAs are concentrated among some of India’s biggest companies whose promoters have taken loans, run their business into the
ground and have not paid back the money they have borrowed (some even turning
wilful defaulters)and as Governor RBI
Raghuram Rajan says “have no divine right to remain in charge of companies” . According to RBI the share of large companies in
the banks’ gross NPAs was 87.5% in September 2015 up from 78.2% in March.
In his New Year’s message to the staff, the RBI Governor has exhorted them to be relentless in pursuit
of wrongdoers, even if it meant holding the powerful to account. “It has been
said that India is a weak state. Not only are we accused of not having the
administrative capacity of fretting out wrongdoing, we do not punish the wrong doer,
unless he is small and weak. This belief feeds on itself. No one wants to go
after the rich and well- connected wrongdoer, which means they get away with
even more. If we are to have strong, sustainable growth, this culture of
impunity should stop. Importantly, this does not mean being against the riches
or business as some would like portray but being against wrongdoing”. Strong
words indeed.
It is therefore ironical that awards are given to some of
these big companies for excellence in performance under various categories. A plethora of organizations like ASSOCHEM and
FICCI as well as news and financial papers and magazines give such awards at
glittering functions held in five star hotels . These awards have become so
numerous and frequent as to lose their
significance. One is even led to suspect that some chiefs of companies may
hanker after them. There is more or less
the same jury, the same few chiefs in the race and a few political
bigwigs from the ruling party which
makes a mockery of the awards. Like the Padma awards these too have lost their sheen and covetousness
.
One important
criterion for these awards should be a check that a company is not loan
defaulter to any bank , public or private, or financial institution. Loan
defaults and excellence awards do not gel.
