India’s public sector banks belong to the people of India. The banks have been robbed by corporates who borrow crores of rupees and default.
On 20/7/2014 Vishwas Utagi, Vice President, All India Bank Employees Association, released a list of defaulters and amounts.
| Rs. in crores | |
| Bad debts restructured and shown as good debts | 325000 |
| Fresh bad debts in last seven years | 495000 |
| Bad debts written off since 2001 | 204000 |
| 1024000 |
There is complicity in this robbery. Lists of borrowers are kept secret. The borrowers default in one bank and go to another bank to get loan. Corporate Debt Restructuring is a way to avoid debt payment. Many borrowers enjoy political patronage.
The loss to the people of India is 10,24,000 crore rupees. I wonder how much money has been lost since 1969 when 14 banks were nationalised. More banks were nationalised later on.
Banks have gone to courts to recover 70,367 crore rupees. That is just about 7% of the amount. Court cases take a long time.
Vijay Mallya’s Kingfisher Airlines tops the list of defaulters. Top 10 defaulters owe 18,000 crore rupees to banks. Subrata Roy of Sahara is in jail for defaults to private individuals. Promoters and Directors of defaulting companies should be in jail. Narendra Modi with Arun Jaitley’s help can bring a law in a day to put defaulters in jail as an ordinance was brought to hire a former TRAI chairman as private secretary to Prime Minister. Then banks will recover their money. Non-Performing Assets will disappear. Those who do not pay should spend the rest of their lives in jail.
RBI and banks should publish the lists of all defaulters to prevent defaulters from taking loans from other banks and bankrupting them. There is an old joke that a businessman goes in Maruti to bank to take loan. He goes in Mercedes Benz to say he cannot repay the loan.
Recapitalisation of banks means RBI printing notes and giving them to banks. This causes inflation. Recapitalisation of SBI and some other banks has taken place. On 19/7/2014 Arun Jaitley said recapitalisation of public sector banks to the tune of 2.4 lakh rupees to meet Basel III norms is a high priority item for the government. That will result in more inflation.