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COIMBATORE, April 12

THE United Forum of Bank Unions (UFBU), which is to participate in the all-India strike on April 16, called by the central trade unions, has said that the UFBU's main issue would be `Non-performing assets (NPAs)' in banks.

Stating that NPA was the biggest problem confronting the bankers today, the General Secretary of the All India Bank Officers' Association (AIBOA), Mr R.J. Sridharan alleged that the calculation of NPAs was mere `arithmetical jugglery'.

He said the efficiency of a bank was not always reflected only by the size of the balance sheet but by the level of return on its assets. "In the case of NPAs, the banks are required to make a provision from their current profits, though such NPA accounts do not generate interest income for the banks. This has a deleterious effect on the return on assets, as it requires higher provisioning requirements affecting profits and accretion to capital funds," he explained.

Talking to Business Line, Mr Sridharan said "at times, there is a tendency among some banks to understate the level of NPAs, resulting only in postponing the doomsday effect, as happened in some banks with disastrous consequences".

While the banks continue to contend that the NPA level was well within limits, he alleged that in absolute terms, it could be staggering, costing the public sector banks over Rs 5,000 crore annually, by way of loss in interest income, besides servicing and litigation costs.

"Bank credit is the catalyst to the economic growth of the country and mounting NPAs is a major cause for disrupting the smooth flow of credit," he said and pointed out that a survey revealed that large borrowers were reluctant to honour their repayment obligations.

Categorically stating that "bureaucratic approach to sensitive issues diluted the focus", Mr Sridharan said "many tiers are not needed. They are only a smoke-screen to push the issues under the carpet".

Reverting to the post-VRS scenario, the AIBOA General Secretary alleged that placement and promotions operated in a nexus. The right man was not posted for the right job. According to him, the public sector banks were losing their market share because of laxity in service.

He lamented that even the UFBU operated with different shades of opinion, though they had come under one umbrella on certain issues such as disinvestment policies of the Government and privatisation.

On wage settlement, Mr Sridharan indicated that the unions would demand a 15 to 20 per cent hike to the existing levels, because appropriations were huge in the industry. "Even in socialists countries, wage demands are not shut out," he added.

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