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February 2018
 |
| AIBEA (The Total Investment & Insurance Solutions |
Huge
bad loans in banks is a big problem, but there is nothing much about
recovering non-performing assets (NPAs) in the Budget, except for
measures to tackle NPAs of micro, small and medium enterprises (MSMEs),
presented by Finance Minister Arun Jaitley, says a bank union.
In
a statement, CH Venkatachalam, General Secretary, All India Bank Employees
Association (AIBEA), says, "The recovery of piling bad loans of the public
sector banks has not been addressed in the Budget. AIBEA has been demanding stringent
measures to recover the huge bad loans, particularly from the corporate
defaulters. But no concrete measures have been announced. Already, there are
indications that under the Insolvency proceedings, Banks are going to suffer
deep haircut and huge sacrifice. But still, no other effective measures have
been announced."
According
to data furnished by Reserve Bank of India (RBI) and the government, by
September 2017 end, NPAs, or bad loans, of state-run banks amounted to a
staggering Rs7.34 lakh crore. NPAs of private sector banks, however, stood at a
much lower level of around Rs1.03 lakh crore by the end of the July-September
quarter.
Leading
corporate entities and companies accounted for around 77% of the total gross
NPAs of banks from domestic operations, a statement issued by the Finance
Ministry had said.
AIBEA
says it has been demanding for periodical publication of names of loan
defaulters by amending the RBI Act, but it has been deliberately avoided.
"This shows that Government wants to protect the corporate companies
because of election funds," it said.
The
bank employee union has also been demanding to define wilful loan default as a
criminal offence. However, this also has been ignored indicating the nexus and
vested interests, AIBEA says.
In
June 2017, the RBI identified 12 NPA cases. Later it came out with a second
list comprising of about 28 accounts worth over Rs1.5 lakh crore, to be taken
to the National Company Law Tribunals (NCLTs) for resolutions under the
Insolvency and Bankruptcy Code (IBC).
According
to the union, there is also no indication that the Financial Resolution and
Deposit Insurance (FRDI) Bill will not be pursued thus attempts are afoot to
utilise the people's money to whitewash corporate delinquency. "Today
total deposits with the banks is around Rs110 lakh crore. We need to protect
this precious money of the common people of the country. Total deposits in the
banks should be fully protected and guaranteed," Mr Venkatachalam
said.
Earlier,
in a report, CARE Ratings had pointed out that India's NPAs are growing rapidly
and the country was at fifth spot in terms of high NPAs across the world.
“India features very high up the order and is lower than only Portugal, Italy,
Ireland and Greece. Quite clearly, the Insolvency and Bankruptcy Code (IBC) and
National Company Law Tribunal (NCLT) have its task cut out to lower these
numbers and make the system more robust,” the research note had said.
The
seriousness of the NPA problem can be gauged by the absolute level of impaired
assets in the system. “Ever since the Reserve Bank of India (RBI) had spoken of
asset quality recognition (AQR) in 2015, there was an increase in the pace of
recognizing these assets. It is not clear whether all have been recognised as
yet, though judging from the trends witnessed so far, it does appear that the
cleaning up operation on this score would be completed by March 2018. From
there on, it would be more a case of incremental NPAs being generated on
account of other factors rather than one of recognition by banks,” the report
had stated.The Total Investment & Insurance
Solutions
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