Professional Documents
Culture Documents
FINANCE
No rooin for
coinplacency
on-performing assets
(NPA) have been in
the headlines for quite
sometime now; they
have assumed epidemic
proportions and threaten
to derail the banking
system. A recently released survey report by
Ernst & Young, Unmaskin9 India's NPA issues - can
the bankin9 sector overcome this phase? highlights the
present market scenario. As much as 72% of the
respondents (a majority of whom were bankers)
said the crisis will worsen, 64% said there were
lapses in the initial borrower due diligence (presanction), and 4 3% blamed change in political/
regulatory environment leading to business loss.
According to the report, the overall level of
stressed loans- or the sum of gross NPAs and
gross restructured assets- rose to over 11 %
in March 2015, from 9 . 2% in March 2013 .
Similarly, gross NPAs rose to 4.6% from 3.4%
in the same period.
At 39 listed banks, gross NPAs rose by
27.69% to ~3.21 trillion on 30 June 2015
from~ 2.51 trillion a year earlier. Although
diversion and misuse of funds are still a major
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FINANE
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and chaotic business ecology. The companies
which model themselves on mechanical systems,
where future is an extension of the past, are
doomed to fail. The mechanistic model is deeply
embedded in traditional business practices
because it has produced so many successes. It is
rooted in the success of the Industrial Age and
heavily influenced by Frederick Taylor's scientific
management to move the modern world out
of a feudal agrarian state into the prosperity
of industrial age. In 1958, S&P 500 index
companies survived on an average of 61 years.
By 1980, this figure had dropped to 25 years
and by 2011 to only 18 years. Companies fell
off the index as they declined in market value,
were acquired by others, or were threatened by
bankruptcy. As management guru Gary Hamel
says, "The seeds of failure are usually sown at the
heights of greatness".
Eight months prior to the filing
It is when the company
of bankruptcy, General Motors's
is at the height of
then chairman, Rick Wagoner,
success, it should
boasted that his company was
'ready to lead for 100 years
question its assumptions
to come' - a comment that
and practices.
only could have been made by
someone who was either naively
optimistic or hopelessly delusional. Though GM
has been getting better for a long time, yet it
has been 40 years since it was the best. 7 GM
committed suicide in degrees. Success robs us
of our learning capabilities and it is when the
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Suhayl Abidi is
a practitioner in
organisational
learning and
knowledge
management and
co-author of The
VUCA Company.
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FINANCE
Dr Manoj Joshi
is Professor
of Strategy,
Entrepreneurship
and Innovation at
Amity Business
School, Lucknow,
and co-author
of The VUCA
Company.
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