The ongoing lockdown has hit the courier services in the country. Due to this, banking customers, whose debit and credit cards have crossed their expiry date or are set to expire in the next couple of months, are now facing a challenge of how they will get their cards replaced, because the local authorities have not allowed courier companies to function despite the Centre mandating a restart post April 20, reported The Indian Express.

A senior official of a leading payment network company, while on an average around 50 lakh cards come for renewal every month, the number of renewal application for the month of April are expected to be higher than average. The official said, “On an average, about 4-5 million cards across banks come up for renewal every month keeping 5 year validity in mind. If you extrapolate that for three months the number would be close to 1.5 crore cards and thus it will impact a large number of customers.”

The IE states that in April 2015, the banking industry had added 1.13 crore debit cards and over 1.7 lakh credit cards. Even if 80 percent of these accounts which have a validity of five years and are currently active, 90 lakh cards were due to be renewed in April 2020. In the month of May 2015, over 60 lakh new cards were added and they would ideally come for renewal next month.

Reserve Bank of India (RBI) data states that as on March 31, 2019, the number of debit and credit cards issued were 925 million and 47 million respectively. In the year 2017, debit and credit cards made up 29.9 percent of India’s payment systems volume and volume of card payments grew by a CAGR of 40 percent from 880 million transactions in 2012 to 4799 million transactions in 2017.

RBI data also shows that there as of January 2020, there were 81.6 crore outstanding debit cards and 5.6 crore outstanding credit cards.

Banking has been declared as an essential service during the lockdown and bankers are now asking for the physical delivery of the cards to be declared an essential service too. However, a senior official from a private sector bank explains, “While some businesses like courier have been allowed post April 20, the situation on the ground is not exactly conducive for courier companies to deliver the cards to customers.” The official also added that banks had reached out to India Post for help to deliver these cards, but it refused to do so.

“Unavailability of courier services has affected not only delivery of cards but also many other banking operations. We are trying to ensure that customer inconvenience is minimised. The impact right now is limited since customers need cash only for essentials as other economic activities are shutdown,” the senior official added.

Do the customers have an option?

Banking officials say there are a few options to debit and credit cards, but they are quite inconveniencing.

One is cardless withdrawal and virtual cards. Sources say only handful of banks offer cashless withdrawal facility. Another option is the virtual card, but bankers say while virtual cards are used for e-transactions, there is a constraint on cash withdrawal which is the prime necessity in current times.

For example, ICICI Bank’s Cardless Cash Facility allows customers to withdraw cash from over 15,000 ATMs of the bank by raising a request on its mobile banking app, iMobile. This allows customers to withdraw cash without using a debit card at ATMs.

The virtual credit card, as explained by Bank Bazaar, is a one-time use credit card that has no physical existence and can be used for carrying out online transactions only. Like physical credit cards, a virtual credit card has its own unique card number, validity date, the expiry date, and the CVV number which are visible online. You can also set your own spending limit on the virtual credit card. However, these cards may usually have a very short validity.

Banks too can enhance the expiry period of the card issued by them, but it is a tedious process. “We will have to do segregation according to customers and then process it both at our end and also get the merchant systems updated,” said an official with a bank.

Another option is for the customers to withdraw cash from the bank to meet their needs.

“By far, debit cards are the most convenient for a large number of people and if the renewed cards don’t reach the customer, it will cause inconvenience to millions,” said a banker.

Related:

Sanitation & Justice: Classify Sanitation Workers as Health Workers
Several states announce monetary aid for workers stranded outside state

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The closure of the PMC Bank has claimed two innocent lives protesting against the bank to return their funds which have been in a deadlock since its closure on September 26, 2019.

Today, October 15, Fatto Punjabi breathed his last after suffering from a heart attack. Sources say that he had participated in protests against the curbs imposed by the RBI on the PMC Bank in the last few days. He held a bank account in PMC’s Mulund Branch. 95% of people in Mulund Colony hold accounts with PMC Bank.

This is the second death of a depositor within 24 hours.  Yesterday, after attending a protest march outside a city court, 51-year-old Sanjay Gulati, a resident of Oshiwara, succumbed to a heart attack. Fate dealt Gulati a cruel hand a second time around. After suffering from stress of the loss of his job as a former employee of Jet Airways, Rs. 90 lakh being stuck in the bank’s lockers, added to it, leading to his untimely death.

Here, his wife recounts the horror Gulati and his family went through due to the crisis.

With protests and meetings taking place all over the city, it is the customers who are trying to find a way to recover their money.

“The government can implement Article 370 in no time, then what is stopping them from helping 16 lakh bank depositors of PMC bank?” asked one depositor.

And yet, it is preposterous that only now, after these deaths that the Maharashtra Chief Minister Devendra Fadnavis said that he would ‘request’ the Centre to resolve the crisis in the PMC Bank.

Why Are There No Organized Protests?

Ever since the RBI imposed restrictions on the bank, it has only been the people afflicted who have staged protests against the harsh decision meted out by the apex bank of the country. Hardly any politicians, housing organizations or official political bodies have come out in support except for screaming foul from the sidelines.

One such organization is the Oshiwara Lokhandwala Citizens’ Association (OLCA), whose Chairman and Trustee are film-maker and BJP supporter Ashoke Pandit and Rakesh Coelho, the BJP Secretary of the NW District Committee, respectively.

The residents of most of the MHADA buildings that fall under the OLCA have their accounts with the PMC Bank because this was the only bank that existed at the time the society was formed. Even official financial accounts of the buildings are registered with the same bank. Why is it then there is no organized protest from the association?Is just holding a candle march and observing a two-minutes silence the hallmark of a protest?

A pithy tweet by Ashoke Pandit condemning the bank didn’t do much.

He later got called out for not tagging the BJP authorities in the tweet, like he does in every other.

Captain Rakesh Coelho maintained his silence over Gulati’s death. Instead, he tweeted about –

It is public knowledge that the Rajneet Singh, son of a BJP strongman was on the board of the PMC Bank and HDIL, both. Tara Singh, Rajneet’s father had been the BJP’s four-time MLA from Mulund.
The BJP has placed members like Pandit and Coelho as buffers for the public to not react against such scams. The organization, has instead been campaigning for the BJP at the micro level by targeting the public through Whatsapp groups. These messages are solely meant to divert the people’s attention from such major issues to irrelevant issues to perform damage control and protect the image of the tainted government.

For example:

 
A Looming Economic Crisis
While the RBI claimed that the Indian banking system was safe and stable, economics experts have a different view.

“The financial crisis that began with the IL&FS debacle … seems to be entering its climactic phase,” said SaurabhMukherjea, Mumbai-based founder of Marcellus Investment Managers. “The share price volatility for banks and lenders is expected to continue for the coming few months.”

On Thursday, Finance Minister NirmalaSitharaman, after meeting the distraught depositors of Punjab and Maharashtra Cooperative Bank, said that the government could bring a legislation in the winter session of Parliament to improve governing of cooperative banks, if necessary.

The PMC Bank crisis has had a far reaching psychological and emotional impact on all those who have been affected by its closure.

The only way to stand up against it, is to VOTE for the right government. It is only the correctness of our vote or the absence of it that will bring the culprits to book.

Related
Warning of severe slowdown World Bank cuts India growth projection to 6%
Did PMC Bank play favorites? Bank saw massive cash withdrawals before RBI clampdown
RBI puts Mumbai based PMC under restrictions, Chaos reigns outside Bank’s Branches
How Bhakts turn Skeptics: Hailing Demonetization then, distressed by moves at PMC bank today

The post Why aren’t we up in arms? PMC bank crisis claims life of 2 appeared first on SabrangIndia.

Pointing towards instances of undermining transparency, such as amendment to the RTI Act, electoral bonds, bank frauds, NPAs and unemployment data, in a joint statement, they say, “Subsequent to the abrogation of Article 35A and the dismemberment of Article 370 of the Constitution, the Jammu & Kashmir (J&K) Reorganisation Act, 2019, repeals the J&K RTI Act. The transparency law in the state was repealed without any transparency in the process itself!”
 

Text:

October 12, 2019, marked 14 years of implementation of the Right to Information (RTI) Act in India. The law has empowered millions of people across the country to exercise their fundamental right to seek information and hold the government accountable.

Never has the government’s commitment to transparency been as questionable as it is today, on the 14th anniversary of the RTI law — information of critical national and public importance continues to be denied and the Act itself was weakened through amendments.

A convention was organized by the Central Information Commission, the first since the RTI Amendment Act 2019 was passed by Parliament, which dealt a serious blow to the law. Despite protests across the country and opposition from several political parties, the BJP government brought in amendments to the RTI Act.

There were no public consultations on the amendments and in fact even the text of the amendment Bill was not made public before being introduced in Parliament. The amendments empower the Central government to make rules regarding the tenure, salaries, allowances and other terms of service of the chief and other information commissioners of the Central Information Commission (CIC) and all state information commissions (SICs).

It has been more than two months since the amendments received the assent of the President on August 1, 2019. However, till date the Central government has not promulgated rules.
 

The post Amit Shah ‘wrong’: Lack of transparency characterized bank frauds, NPAs, jobs data appeared first on SabrangIndia.

• RBI denies reports regarding closure of 9 banks false
• A viral message on social media said RBI is planning to shut nine commercial banks
• The fake message spread online after RBI cracked the whip on PMC bank

The Reserve Bank of India (RBI) has clarified in a statement today that social media rumours regarding the closure of some commercial banks are false.

A message, which says RBI is planning to close nine banks permanently, went viral on social media and resulted in panic among public in the backdrop of the top bank’s actions against Punjab and Maharashtra Cooperative (PMC) Bank on Tuesday. However, RBI in a statement rejected rumours about closure of nine banks–Corporation Bank, UCO Bank, IDBI, Bank of Maharashtra, Andhra Bank and Indian Overseas Bank.

“Reports appearing in some sections of social media about RBI closing down certain commercial banks are false,” RBI said in a tweet.
 

Finance Secretary Rajiv Kumar called the rumours about RBI closing shutters on some banks “mischievous” and that there is “no question of closing any public sector bank”.

“There are mischievous rumours on social media about RBI closing some banks. No question of closing any public sector bank, which are articles of faith.

Rather govt is strengthening PSBs with reforms and infusion of capital to better serve its customers,” Kumar said.

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Earlier, the Reserve Bank of India restricted the bank from carrying out any kind of business transactions on Tuesday. This has sparked a state of panic among the banks depositors and sent shock waves in city trading community which uses this bank for their requirements.

Customers took to twitter to express their distress and outrage.

Several of these twitter users shared the acute distress and immense chaos at various bank branches across Mumbai city.

“Hundreds of depositors queued outside #PMCbank at PMGP colony branch in Poonamnagar, Andheri (E) to withdraw money after #RBI restrictions. The bank won’t be allowed to grant or renew any loans and advances, make any investment http://bit.ly/2kIokLc Video: Vijay Bate”

One twitter user/ customer of the bank lamented about the money he had saved for his daughter’s marriage
“#PMCBankIts nothing but bankruptcy. My 25 lakhs, saved for daughters’ marriages, are now trapped. My lifetime saving getting washed out overnite. Feeling sad.”

 
One person said it was not fair to “freeze” accounts.

“Whatever is reason, It is working of bankers not citizens. Only few accounts should be freezed. Citizens are scared now. What about their hard earned money. One citizen fainted out side#pmcbank#ulhasnagar
@TOIIndiaNews
@toi
@MumbaiMirror”

Another user highlighted that how they switched from cash transactions to online transactions and yet the outcome has been disastrous.

“And what should the account holder do on receiving this http://message.Rs 1k is all that we can withdraw over 6 months. We stopped keeping cash at home because you encouraged online transaction and now we can’t even withdraw our own hard earned money.

@nsitharaman
#pmcbank”

One user highlighted that this could happen to other bank accounts as well.

“RBI puts #PMCBank under restrictions for 6 months. Depositors will be allowed to withdraw only ₹1,000 from their savings & current account. Tomorrow it could be IDBI Bank, UCO Bank & Indian Overseas Bank who have NPA ratios above 20%. Seriously scary!”

A twitter user took a jibe at the Ambanis and Adanis

“Dear @PrafulS98568293
I know your life is ruined after losing all savings for your daughters’ marriages. But a week ago, I gave away 1.45 Lac Crores of YOUR MONEY to the Ambani&Adani who had lost far more with stock markets crashing. No more money left for #pmcbank Love Modi”

Not only Mumbai, other cities were also drastically impacted,

“After RBI restrictions, Chaos at Nashik branch of #PMCBank Angry depositors gherao officials #Nashik”

A twitter user also took a dig at those who had cheered for PM Modi in Houston,

“With #PMCBank closed with not fault of the depositors. All our hard earn money stuck. How can one survive with total withdrawal of only Rs. 1000. I wish if 50000 Houston people can come down and help the depositors. But for Modi it’s … #BakiSabTheekHai”

Joy Thomas, the bank’s Managing Director, reportedly told thousands of distressed customers of PMC Bank, “As the MD of the Bank, I take full responsibility and assure all the depositors that these irregularities will be rectified before the expiry of six months,”

Some reports indicate that the bank may have given fraudulent loans not disclosed non-performing assets (NPAs) properly. The RBI hasn’t said anything apart from the notification. The customers feel clueless about the future course of actions.

The bank appears to be administered by an RBI-appointed officer called J.B. Bhoria at the moment. It is not clear whether Bhoria has taken over the management of the bank or is merely in charge to oversee the eventual loosening of restrictions.

It’s not immediately clear whether the Rs. 1,000 withdrawal restriction is per day or just Rs. 1,000 for now until the RBI says otherwise.

However, this is going to pose a challenge for both retail and business customers, especially considering October 1 is just one week away.

Ordinary people’s daily needs will be affected, in addition to any events such as marriage that require large withdrawals from the bank.

Bhoria, in an interview with a TV channel, tried to reassure customers by implying that in the case of of a total bank failure, their accounts are insured for up to Rs 1 lakh by the Deposit Insurance and Credit Guarantee Corporation of India. This was no relief for people who had deposited larger sums of money in the bank accounts.

PMC bank has not many details in the public arena that could have pointed at such a disaster. In the year that ended March 31, 2019, it made a net profit of Rs 99.69 crore and had net-NPAs of 2.19%, which had doubled from 1.05% in the previous financial year. Gross NPAs, however, are at 3.76%. 

PMC Bank MD Joy Thomas has indicated that the restrictions have been caused by an “increase in NPAs” and implied that they are still covered by the bank’s assets, but declined to provide more information at the moment.

Though such an action is not totally uncommon, with RBI imposing some restrictions on other smaller banks such as VithalraoVikhePatil Co-operative Bank in Nashik and KaradJantaSahakari Bank in the past, what distinguishes this particular action from all others is the sheer scale of the tragedy. Founded by S. Gurucharan Singh Kochhar in a small room in erstwhile Bombay in 1984, PMC Bank has now grown to be one of the top 10 co-operative lenders in the country. It has 137 branches in six states and as of March 31, 2019, had total deposits of Rs 11,617.34 crore and advances of Rs 8,383.33 crore.

The Law

The Reserve Bank of India’s (RBI) directions on the Punjab and Maharashtra Co-operative Bank is not a one-off event, though customers are worried.

“The directions are imposed in exercise of powers vested in the Reserve Bank under Sub-section (1) of Section 35A of the Banking Regulation Act, 1949 read with Section 56 of the said Act,” the RBI said in a statement, adding that it should not be seen as a cancellation of the banking license.

What do these Acts state?

Section 35(A) of the Banking Regualtion Act says that the RBI in public interest and to “to prevent the affairs of any banking company being conducted in a manner detrimental to the interests of the depositors or in a manner prejudicial to the interests of the banking company; or to secure the proper management of any banking company generally” can issue directions to these entities. Section 56 of the Act applies to cooperative societies.

Background

The RBI has, in the past, imposed similar sanctions on other banks, especially co-operative banks.This month, it has extended such sanctions under Section 35 (A) for Osmanabad-based VasantdadaNagariSahakari Bank, VithalraoVikhePatil Co-operative Bank in Nashik and KaradJantaSahakari Bank.

In May 2019, it had imposed financial curbs on Goa-based The Madgaum Urban Co-operative Bank and capped withdrawals by account holders at Rs 5,000.“The directions by the RBI are in public interest to ensure better governance and controls at these banks,” said a former banker who did not wish to be named.

Similar RBI directions

On September 11, the RBI also withdrew similar directions it had imposed on Lucknow-based Indian Mercantile Co-operative Bank on June 04, 2014, which it had been extending from time to time.

“Reserve Bank, on being satisfied that in the public interest it is necessary to do so, in exercise of the powers vested in it under sub-section (2) of section 35A of the Banking Regulation Act, 1949 (as applicable to co-operative societies), hereby withdraws the said Directions so issued (and modified from time to time) to Indian Mercantile Co-operative Bank Ltd, Lucknow, Uttar Pradesh,” it had said.
 

The post Disaster Day for PMC Account Holders: Acute Customer Distress on Twitter appeared first on SabrangIndia.

Sabrangindia has a video that may be viewed here.

A hapless citizen said, “PMC Bank stops functioning, people crying outside bank branches, Kandivali (Charkop) branch a business man’s cheque of 10 lakhs got credited today and bank shut operations!!! He fainted as he had to make payment today to his supplier, Very bad state”

The Reserve Bank of India has placed the bank under restrictions, suddenly disallowing the bank from conducting carrying out any kind of business transactions on Tuesday. This has sparked a state of panic among the banks depositors and sent shock waves in city trading community which uses this bank for their requirements.

Chief General Manager of the RBI, Yogesh Dayal said that as per the RBI directions, depositors cannot withdraw more than Rs 1,000 of the total balance in their savings/current/other deposit accounts. That this move has taken place without any prior notice raises serious questions over customer confidence.

The bank has been barred from granting, renewing and loans and advances, make any investments, accept fresh deposits, etc. without the prior written approval from RBI.

In a statement, the central bank has said that the issue of the directions shouldn’t be constructed as a “cancellation of a banking licence by the RBI”. And that it will continue to undertake banking business with restrictions until further notice/ instructions. Reportedly the RBI may consider these directions depending upon circumstances.

In response, the RBI said that it was exercising its powers vested in it under the Sub-section (1) of Section 35A of the Banking Regulation Act, 1949 read with Section 56 of the said Act. PMC Bank had deposits and advances aggregating ₹11,617 crore and ₹8,383 crore, respectively as at March-end 2019.

The Bank is a multi-state scheduled urban co-operative bank with its area of operation in the States of Maharashtra, Delhi, Karnataka, Goa, Gujarat, Andhra Pradesh and Madhya Pradesh. It has 137 branches.

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The Bill has faced opposition from various quarters, namely bank unions, individuals, financial analysts and so on. An online petition initiated by Mumbai resident Shilpa Sree, against the FRDI bill got more than 40,000 signatures merely hours after it was started. Now the Campaign against the Bill urges you to:

“FRDI Bill, if enacted, might rob the common people of their savings; give authoritative powers to a body (Resolution Corporation) to weaken, merge and even liquidate public sector banks, leading to their privatisation. This is a Bill pushed through without a public debate and adequate consultations. Demonetisation and GST was bad enough, it left a deep scar on the common people informal economy and the poor. FRDI will fundamentally change the financial system of this country, where poor will be made to pay for the debts of the rich and wilful defaulters. Please ask your Member of Parliament to not to legislate the FRDI Bill. Visit http://www.repealfrdi.net to send an email to your MP or know more about the proposed bill.”
 
“Thank you for being a part of the Repeal FRDI campaign. In the last one month, over a couple of thousand people have sent emails to their Members of Parliament asking them not to legislate the proposed FRDI Bill.
 
“However, as the Joint Parliamentary Committee will submit its report in February, we urgently need to reach out to as many people as possible in the next one week or so. Collectively, can we aspire to get at least 25,000 emails by the month end so that there is a pressure on the government to withdraw the bill? 
 
“One of the simplest ways through which we can make this a mass campaign is by reaching out to our contacts — in person, through email, website, social media, and publications — requesting them to not only send the petition themselves but also to share it widely. 
 
“Given the majority of the ruling party, unless there is a mass appeal against the FRDI Bill, there is not much hope to prevent this bill from getting legislated. 
 
Background
 
The Bill aims to establish a Resolution Corporation that will monitor financial firms, anticipate risk of failure, take corrective action and resolve those. The financial firms may be classified in several categories based on the risk of failure 1. Low, 2. Moderate, 3. Material, 4.Imminent, 5.Critical. Depending on the status of the financial firm, the Resolution Corporation may take over the management of the firm using methods such as (i) merger or acquisition, (ii) transferring the assets, liabilities and management to a temporary firm, or (iii) liquidation.

A contested definition in the bill is of the ‘bail-in’ provision which, analysts apprehend, will put the depositors’ money in the banks at the risk and drive the economy towards a crisis worse than demonetization.

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What is a  Bad Bank?

A bad bank is basically a bank which will buy the bad loans from different banks and try to “reconstruct” the assets to get back the money that was due.

With the main opponent to this plan- Raghuram Rajan out of office- the finance minister of India, the chief economic advisor to the Indian government  and a deputy governor of the Reserve Bank of India have recently opined that a bad bank should be established as soon as possible.
 

1. Why did Raghuram Rajan oppose it?

He opposed it because of the Indian banks’ debt profile. Almost all the bad loans or NPAs are in government owned public sector banks and almost all of these are a result of loans being given to privately owned corporation and business houses. The private sector will not invest in a bad bank because it is a venture which guarantees loss. So, Raghuram Rajan was worried about the government using public money in order to settle private debts which might have serious consequences for India’s debt to GDP ratio.

In other words, Raghuram Rajan implied that if most of the loans were in the private sector banks then the banks would/could have been forced to raise money from the public through securities to solve that problem. But now the government will be forced to do that if it decides to set up a bad bank which will increase government debt and force them to limit expenditure.
 

2. What does it mean in simple words?

Well, we as a nation have watched in slow-motion all the bad business decisions of liquor baron Vijay Mallya, such as, buying an IPL team, buying a Formula 1 racing team, private jets, expensive cars and last but not least swimsuit calendars. If a “bad bank” is formed all of Vijay Mallya’s bad loans could be transferred to it and the government will have to use our money to right Vijay Mallya’s mistakes. I don’t know about you but I find this completely unacceptable. But, Vijay Mallya is just one example- there are hundreds of people like him, many of whom are even bigger spenders than Mallya.
 

3. If this plan is so bad then who is supporting it?

Last year the former RBI governor Rajan forced all banks to disclose their Non-performing assets. This led to a lot of embarrassment for many bank officials when it emerged that they gave loans to private business concerns which should not have got any if normal banking procedures were followed. Investigative journalists also soon found out that many of these loans were given out due to pressure being exerted by government bureaucrats on the banks.

But now with a bad bank buying up all the banks’ bad loans and NPAs- the bank officials and bureaucrats can wash their hands off of their misdemeanours and pass the responsibility for an asset’s “non-performance” onto this newly founded institution.
Bankers have a second reason to support this plan. If a bad bank is set up then the responsibility of banks to lend money responsibly considerably decreases because after all if the loan becomes a Non-Performing Asset then they can simply sell it to the Bad Bank and wash their hands off from any fallout.
 

4. Is there any alternative to deal with NPAs other than opening a Bad Bank?

In order to deal with bad loans the government owned banks have been engaging in “assets reconstruction” either by themselves or by employing privately owned Assets Reconstruction Companies, but this initiative has been a failure. Now with a bad bank the government is hoping to succeed by setting up a big government owned Assets Reconstruction Company to deal with NPAs. I have only one thing to say here, that is to quote Albert Einstein- Insanity is doing the same thing again and again and expecting different outcomes.

Indian government should seriously and sincerely think of a different way to deal with these Non-performing assets. Below I have mentioned a suggestion- please have a look at it.

Possible Solution

One of the meanings of the word “democratise” is to make something available to all. Why don’t we democratise the NPAs?

Keep the NPAs with the respective banks. The banks know who their high value customers are. Banks can contact the assets reconstruction companies and not ask them to reconstruct the non-performing assets which take a lot of time without any guarantee of success but asks them which failed assets can most easily be reconstructed or re-converted into a profitable asset. This is not a difficult job to do and frankly there are many private consultancy firms in India which can do this job. The banks then should offer to sell these NPAs which have high probability of success to their high value customers. Only those customers who have impeccable credit record which can be easily determined with the help of CIBIL or Credit Information Bureau of India Limited should be made eligible to buy such an asset.

Any asset thusly sold to a private party should for a particular time period be made eligible for loans based only on the immovable assets of the business or the high value customer to whom this NPA had been solved. Moreover, loans should only be approved if the buyer of these assets agrees to implement the changes which have been proposed in a plan drawn up by the bank and the firm which assessed the non-performing asset before it is sold to the high value customer.

There are many high value individuals banking with Indian banks but most do not have any business background or entrepreneurial acumen. The pre-conditions to sell NPAs to such individuals should also be that they agree to set up an independent board of directors who can run the everyday operations of the newly acquired asset. The size of this board must vary according to the size of the asset and always be an odd number to avoid indecision.

I think this plan will work because there are many NPAs which have a lot of potential but have been run down by bad business decisions. I also think that there are sufficient number of high value individuals using the Indian banking system who would love to own a business but are hesitant to do it because they do not want to start from scratch and because they are ill-equipped to run the day to day operations of such a business. Moreover, a high value individual will most likely “adopt” a business close to where he/she resides, this will help in the welfare of local communities since NPAs and high value bank customers can be found everywhere in India.

If you like this suggestion on an alternate method to deal with NPAs, please share it online and on government portals.

(Full disclosure– There was recently a similar move to create a bad bank for Europe, but it has been shot down by EU’s biggest economy- Germany. I have been trained by and worked closely with at least 3 leading German economists and economic historians so the above article might be a result of my pre-conceived ideas.)
 

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