With stressed assets reaching alarming proportions, the All India Bank Employees’ Association wants the recovery of bad loans to be done on a war footing.
The association feels that resolution of bad loans via the Insolvency and Bankruptcy Code (IBC) is a bailout for defaulting corporates at the cost of depositors’ money.
Wilful defaulters
“The banking sector has entered a danger zone with non-stop increase in bad loans. Non-performing assets are more than Rs. 15 lakh crore.
“The government has recently admitted in a written reply in Parliament that there are 9,063 wilful defaulters who together owe Rs. 1,10,050 crore to banks.
“From AIBEA we have been demanding that at least the wilful defaulters should be brought under criminal proceedings. This is being deliberately skirted and avoided,” alleged CH Venkatachalam, General Secretary, AIBEA.
He said the long-pending demand to publish the names of loan defaulters is yet to be accepted by the government and the RBI.
“Even in the past, there has been velvet treatment to the defaulters – one-time settlements, interest waivers, compromise settlements, rescheduling, restructuring, write-off, etc.
“For the small borrowers, farmers and students the recovery laws are stringent and they are being unduly harassed. For the big borrowers, it is concessions all the way,” claimed the AIBEA General Secretary.
Venkatachalam observed that while AIBEA wants the recovery of bad loans, the government talks of resolving bad loans.
“IBC is their resolution module. But the RBI has already indicated that in this processes there would be steep haircuts. The haircut is clearly visible now,” he added.
Bhushan Steel
Referring to the case of Bhushan Steel, where the loan outstanding referred to the National Company Law Tribunal (NCLT) was Rs. 56,000 crore, he said the Tatas have taken over this company for Rs. 35,200 crore, leading to the resolution of one NPA account. But banks have lost Rs. 21,000 crore. That is a haircut of nearly 40 per cent.
Venkatachalam elaborated: “Then came the Electrosteel Steels deal. The dues to the banks were Rs. 13,600 crore….Vedanta has purchased it for Rs. 5,320 crore. Banks sacrificed Rs. 8,400 crore. The haircut is 60 per cent.
“Now comes the Alok Industry deal. The company owes to the banks Rs. 30,000 crore. Reliance takes over the company for Rs. 5,000 crore.
“Banks sacrificed Rs. 25,000 crore. The haircut in this case is 83 per cent…This is just the beginning. More such deals will follow soon.”
According to the association, ‘the banking sector has entered
a danger zone
with non-stop
increase in bad loans’
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