Fourfold jump in badloans in public sector banks in 5 years

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All India Bank Employees Association [AIBEA] today released the list of top 400 bad loan accounts in India. Addressing a press conference here today, P.P Varghese, joint secretary, AIBEA and C.D. Jossan, General secretary, All Kerala Bank Employees Federation said that willful default in 406 loan accounts in public sector banks alone comes to the tune of Rs 70,300 crore.

This includes Rs 2673 crore of Kingfisher Airlines, Rs 3156 crore of Winsome Diamond and Jewel, Rs 1810 crore of Zoom Developers and Rs 3672 crore of Sterling Group. Bad loans worth Rs 204,000 crore were written off during last 13 year period.

In just 5 year period [2008-2013] bad loans in public sector banks increased 4.2 times, from Rs 39,000 crore to Rs164,000 crore, they said. They alleged that while the Government is alarmed and concerned about the huge increase in bad loans in the Banks, no effective measures have been taken by the Government to recover these loans.

Since RBI or the Government is not publishing the list of loan defaulters, AIBEA today is publishing the list containing the names of top 400 defaulters of Public Sector Banks. AIBEA today demanded that Banking system must be subject to the auditing of Comptroller and Auditor General of India. Banks must actually recover bad debts instead of artificially reducing the figures in the books of accounts through Corporate Debt Restructuring, selling of Non Performing Assets to Asset Reconstruction Companies at discounted rates, conversion of debt to equity capital investment by Banks.

Personal guarantees must be obtained by the Banks from Promoters of Companies availing of Bank Loans. Laws relating to Recovery of Bank loans must be strengthened to enable effective, speedy, time-bound recovery of bad debts, they said.

Annule SBI-Reliance pact : The reported agreement between State Bank of India [SBI] and Reliance Money Infrastructure Limited for extending banking services by the latter is nothing but privatization of banking services. It is intriguing that the pact signed in February came to limelight only now. It is another astonishing matter that the agreement has retrospective effect from October 5, 2013.

As per the agreement, the Reliance Money as Business Correspondent of SBI will render all the operations of a bank branch, but on higher service charges. While the Business Correspondent model itself is wrought with risks and deficiencies, itis really atrocious that Reliance has been handed over such vital banking functions by a major public sector bank. It is strange that while RBI itself has not chosen to given them license to start their own Bank, the SBI management has brought Reliance through backdoor method into dealing with regular banking services, they said.