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The All India Bank Employees' Association (AIBEA) is planning to observe December 5, 2013, as All India Day, demanding a remedy for the increasing bad loans, alleging that the alarming increase in bad loans in the Public Sector Banks (PSBs) is due to the big and corporate borrowers.
The bad loans in PSBs has increased from Rs 39,000 crore in March 2008 to Rs 1,64,000 crore in March 2013 and the bad loans restructured and shown as good loans accounts to Rs 3,25,000 crore. Of the restructured loans, Rs 2,70,000 crore was in favour of corporate borrowers.
"If we include the bad loans in the private banks and foreign banks and other financial institutions, the total bad loans are more than Rs 2,50,000 crore," says a leaflet issued by AIBEA.
C H Venkatachalam, general secretary, AIBEA, said that the association would release the names of the top defaulters in a press meet on December 5, as part of its protest. It would also conduct demonstrations in various parts of the country raising six demands - to publish the list of bank loan defaulters of Rs 1 crore and above, make willful default of bank loan a criminal offence, order investigation to probe nexus and collusion, amend recovery laws to speed up recovery of bad loans and take stringent measures to recover bad loans. It also demanded not to incentivise corporate delinquency.
The provisions made for bad loans from the profits earned by the Banks has been growing and it has show a growth from Rs 11,121 crore in 2008-09 to Rs 43,102 crore in 2012-13, accounting to a total of Rs 1,40,266 crore as provisioning in the five years.
In a period between 2008 and 2013, the banks' gross profit before provisions for bad loans was at Rs 3,58,893 crore, of which the provisions made for bad loans was Rs 1,40,266 crore leaving the banks with net profit of Rs 2,18,627 crore.
Meanwhile, the provision coverage ratio has been falling, making the banks more vulnerable and susceptible to risks against loan losses and as compared to the provision coverage ratio of 68 per cent as on March 31, 2012, it has reduced to 62 per cent by March 31, 2013.
"According to RBI, the ratio in the entire banking system has fallen from 55 per cent to 45 per cent while the global average ratio is 70 to 80 per cent," it said. A list of Non Performing Asset (NPA) provision coverage, the ratio of provisions made against gross NPA, by the association shows that Allahabad Bank and Andhra Bank had a coverage of 74 and 71 per cent as on March 31, 2012, which has come down to 50 per cent each as on March 31, 2013. Bank of Baroda had a coverage of 80 per cent as on March 31, 2012, which has come down to 68 per cent as on March 31, 2013, according to the data.
The association says that while the bad loans were used to be explained as legacy issues, money stuck up in some old accounts and similar to that, the fresh bad loans added in the last four years is Rs 3,15,465 crore. It said that according to RBI, the banks have added Rs 4,94,836 crore to their bad loans between 2007 and 2013.
The bad loans worth Rs 1,41,295 crore were written off during the period 2007 to 2013 and most of these were in favour of the big defaulters and corporate borrowers, it alleged.
