1. 1. Learning to be a good bankers.
Obviously, banks need better methods of evaluating borrowers. Bankers are
generally aware ofthis, but not so aware specifically of how they could do better.
Banks can improve quality of bankers by providing seminars for them and by
improving the quality of its lending inspectors to its staff on three to five year
contracts.
The person to be a banker must be ethnic, moral and responsible of his work.
2. Reducing the reliance on collateral
Bankers seem to have abdicated their responsibility to screen borrowers.
Instead they have been willing to lend to bad risks while relying on collateral to
save them from their mistakes. Bankers must be in the business of determining
who are good borrowers, and making judgments about the quality of firms and of
managers.
3. Monitoring loan seriously
This is the important step to decide whether the bank can return the payment
or not.
4. Making punishing fraud a priority
Most cases of fraud have not been sophisticated or subtle. To date, the
environment has not exerted much selection pressure. The perpetrators of fraud
appear to have relied upon the inefficiency of the system or their political
connections to avoid prosecution, not skill.
The punishment on the fraud must be carried out legally whether it is internal
or external.