Do we have accurate data on banks?

Dr B Yerram Raju 21 March 2016

Are banks only eager to show data that pleases the Finance Minister and the Prime Minister?

The Reserve Bank of India recently released the Basic Statistical Return (BSR) statistics for 2014-15. This, read with the Trend and Progress of Banking, reveals some interesting results. While the aggregate deposits amounted to Rs89.22 lakh crore, registering a growth of 12.1% in 2015 as against 13.4% in the previous year, the Pradhan Mantri Jan-Dhan Yojana (PMJDY) accounts swelled to 14.4 crore in 2015 constituting 17.4% increase in the group.

The Economic Survey of 2016-17, on page 52 talking of JanDhan-Aadhaar-Mobile (JAM) mentioned that 12 crore accounts under Jan Dhan were opened in just ‘last year’ (Is it January-December or April-March, it is for us to figure).

Chart 2.21 of the Trend and Progress of Banking in India however, confirms that the PMJDY accounts are the basic savings bank deposit accounts. Then read this statement on current account savings account (CASA) deposits in the Report.

“The growth in CASA deposits moderated due to decline in savings deposits that in turn got reflected in overall decline in deposit growth. Bank-group wise, PSBs recorded decline in CASA deposits while private banks (PVBs) and foreign banks (FBs) recorded higher growth during 2014-15.” The decline would have been more alarming but for Jan Dhan.

Banking outlets and basic SB deposit accounts as at Dec 31, 2015

Then the data on population group wise deposits and credit in the BSR 2015 shows that the rural savings deposits showed a steady increase in the number of accounts during the last three years while the semi-urban savings deposit accounts showed a marginal decline during 2014-15 compared to the previous year. Just during the year 14-15, the increase in rural and semi-urban areas amounting to about 14 crore accounts could be attributed to in majority the PMJDY.

GROWTH OF NUMBER OF SB DEPOSITS ACCOUNTS IN BANKING INDUSTRY FROM MARCH 2012 TO MARCH 2015

(Source: Statement 1.18 of Basic Statistics Returns of Scheduled Commercial Banks 2012 to 2015 of RBI)

Admitting that several accounts could be with zero-balance, the banks were supposed to open overdraft accounts after six months of operations. Data reveals that banks opened such accounts only in respect of 0.65% of the total number of accounts as at the end of December 2015.

The RBI seems to be content with the data submission and aggregation but not its correctness across the population groups and different schemes. Already there are wide ranging discussions on the actual position of NPAs versus that reported by the banks. In spite, of computerisation of records, it is strange that such data discrepancies should occur and banks are eager to project what they are not – particularly in the PSBs.

Had it not been for the Prime Minister’s Jan Dhan Yojana, the performance in savings bank deposit accounts would have been far more disappointing. This is the only silver-lining in the dark clouds of NPAs.

The burden of the story is that the banks are eager to show performance that draws the attention of Finance Minister (FM) and the Prime Minister (PM) and the data is like a bikini – hides more than it reveals. Can India afford the luxury of such showmanship?

(Dr Yerram Raju Behara or Dr B Yerram Raju is a former senior executive of SBI and an economist and risk management specialist. The views expressed in the article are his personal.)

Comments

User

Gopalakrishnan T V

9 years ago

Wait for March figures. All figures will look impressive. There will be deposit growth, advances growth and decline in NPAs. All banks will be showing profit and risks will be bear minimum on business front. Bankers would become eligible to draw productivity bonus and the Auditors will prepare the Balance sheet as the Chairman and his Executives Desire. The data collection and dissemination is an art In India and the reliability of data was doubted by none other than Dr Subba Rao the former Governor of RBI The window dressing of banks' balance sheet is a feature well established for decades but how the same art is repeated in a computerised environment is a mystery. The ground realities and the data produced by various institutions do not match is a fact and the policies based on erroneous data cannot produce any better result. Garbage in garbage out is what we experience.