Bank union calls for penal laws to deter corporate defaulters

Claiming the presence of a "nexus" between politicians and corporate houses allowing companies to default bank loans at will, the Bank Employees Federation of India (BEFI) Friday called for penal laws to deter such defaulters.

Releasing a list of over 1,100 companies that have defaulted on bank loans, the BEFI said non-performing assets of nationalised banks have grown at an alarming rate putting in peril their health and allowing certain quarters to advocate for privatization.

"The gross NPA for 26 public sector banks for 2013-2014 stands at a whopping Rs.227,264 crore while the net NPA for year is Rs.130,360 crore. Because of this alarming rise in the NPAs, the banks had to set aside Rs.90,626 crore as provisions and contingencies, bringing down the profit to just Rs.37,007 crore," BEFI general secretary Pradip Biswas said.

The list of defaulters includes the likes of Vijay Mallya-owned Kingfisher Airlines and the Pawan Ruia Group controlled Dunlop and Jessop.

Emphasising the immediate need for enacting stringent laws including penal provisions for defaulters, Biswas said there was a nexus between politicians, government officials and the corporate houses that allowed companies to default bank loans freely.

"Unless there is a nexus, how can you explain Mallya, who has defaulted thousands of crores in banks loans, bidding millions of dollars in the IPL (Indian Premier League)," he asked.

"That is why we are demanding the immediate enactment of stringent laws, including criminal provisions allowing banks an efficient mechanism to not only recover their loans but also deter further defaults," he said.

The BEFI also said it will hit the streets if the government implemented the P.J. Nayak Committee recommendations which call for lowering government holding in banks below 50 percent.

"We have already submitted a memorandum to the union finance minister expressing our concern over the Nayak committee. We will have to hit the streets if the recommendations are implemented because if it happens then there will be a procession of suicides," added Biswas.