AIBEA releases name of top 50 loan defaulters

Demands remedy for increasing bad loans

All India Bank Employees' Association (AIBEA) has announced a list of top 50 loan defaulters, mainly the corporate firms, whose total default amount to the banks is allegedly to be around Rs 40,528 crore. The association demanded a remedy for the bad loans at the earliest to safeguard the public money in the banks.

 

The association has earlier announced its plans 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.

 

Releasing the names of the top loan defaulters today, the association said, “Since the RBI or the Government is not publishing the list of loan defaulters, AIBEA will shortly publish a Booklet containing the names of the top 30 defaulters in each Bank... Since bad loans and write off is a loot of public money, we seek the support of the people in our campaign to safeguard the public money in the Banks.”

 

The list, released by the association, is on the data on loan not paid from Public Sector Banks except State Bank of India, IDBI and foreign banks. C H Venkatachalam, general secretary, AIBEA said that the information from the banks excluded now would be later.

 

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,” said a leaflet issued by AIBEA earlier.

 

It has raised 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.