Voice from the Rooftop

Blog of Vincent Augustine D'Souza

The Great Bank Robbery

There are various ways of robbing a bank. One way is to enter a bank, brandish a revolver, and ask cashier to hand over the cash. Second way is to burgle the bank. Third way is to hack into the bank’s computer system and transfer the amount. There are some other ways. All of them will put the robber in jail. There is one way to rob a bank which will not put the robber in jail. It is to borrow thousands of crores of rupees from banks and not to repay them. The debts are written off. Banks protect the identities of robbers. It is as if the Great Bank Robbers have done favours to banks. Apart from direct default there are two other ways banks are robbed. First is corporate debt restructuring. Second is turning loan into shares at higher than market value. If the market value of a company’s share is Rs.10 the bank gets those shares at Rs.20.
I once on a TV channel heard someone attribute some statements to Arundhati Bhattacharya of State Bank of India. “What is the fault of banks if Supreme Court cancelled telecom licenses? What is the fault of banks if infrastructure projects did not take off?” There were some other similar statements. The fault is loan was given without adequate security. Banks should have made sure they can recover their amount even if everything goes wrong. State Bank of India wrote off bad debts Rs.40,484 crores in three years ending 31/3/2015.
RBI Governor Raghuram Rajan has spoken out against bad debt write-offs.
Financial Year ending 31/3/2015 saw writing off of bad debts Rs.52,542 crores. Modi government came to power on 26/5/2014. Great Bank Robbers had Good Days all along. After Modi came to power they had Better Days.
The Great Bank Robbers live a life of affluence. They have large houses. They own planes and yachts. They own cricket, football and other teams.
Public sector banks are property of the people of India. People of India are robbed when Great Bank Robbers defraud banks. Recapitalisation of banks is printing notes and giving them to banks for making up losses. That causes inflation. It is robbing poor to pay to rich.
Banks were robbed Rs.2,11,000 crores between 2004 and 2015. Of these Rs.1,14,182 crore rupees were robbed in three years between 2002 and 2015. How many crores have been written off since 1955 when Imperial Bank of India became State Bank of India or 1969 when 14 banks were nationalised? In 1980 further 6 banks were nationalised.
State Bank of India had eight subsidiaries.
1) State Bank of Bikaner
2) State Bank of Jaipur
3) State Bank of Hyderabad
4) State Bank of Indore
5) State Bank of Mysore
6) State Bank of Patiala
7) State Bank of Saurashtra
8) State Bank of Travancore
State Bank of Bikaner and State Bank of Jaipur were merged into State Bank of Bikaner & Jaipur into 1963. State Bank of Saurashtra was merged with State Bank of India in 2008. State Bank of Indore was merged with State Bank of India in 2010.
The matter came up in Supreme Court during some other case. Government lawyer opposed making the names of defaulters public. Supreme Court is looking into the matter and the matter is listed for further hearing.
According to a Credit Suisse report Top 10 defaulters are Essar, Reliance ADAG, Adani, GMR, GVK, Lanco, JSW, Videocon and Vedanta. The total borrowings of these 10 defaulters are Rs.7,33,545 crore rupees.
Vijay Mallya is in the news for defaults of 7,000 crore rupees. His lawyer told the Debt Recovery Tribunal that Vijay Mallya is a small defaulter. Banks should go after defaulters like Ambani of Reliance who owns 40,000 crore rupees. State Bank of India wants his arrest. His former employees want their salaries. CBI has filed a case against him and some banks.

Updated: March 8, 2016 — 7:35 am

2 Comments

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  1. Superb post, I think the names should be made public, that way it will atleast expose the person’s and companies that have a good image. We say good governance but it’s just in the books,I too am not for writing off bad loans

  2. A very good post that raises some relevant points…

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