Loan and loot

 Loans that have remained unpaid by big business houses have accrued from Rs 3,23,464 crore, as on March 31, 2015, to Rs 10,35,528 crore, as on March 31, 2018 due to the manner in which public sector banks give in to political pressures. The Modi government had been pointing accusing fingers at the UPA for abetting or ignoring the massive loot of public money. However, from facts available, it is clear that the loot is still taking place under the Modi government. This is not to blame any government of the loot but to question the role of the mandarins at the finance ministry and top bosses of various banks. Managers of government owned banks know that if loans given to businessmen close to politicians go bad, the government will ultimately pick up the tab by recapitalising the public sector bank to an adequate extent. Therefore, the pressure put on the bank chiefs has led to “ease of doing business” with easy loans to borrowers who are likely to default. According to the Reserve Bank of India (RBI), banks will continue to face deterioration in their non-performing assets (NPAs) or bad loans due to the current economic conditions in the current fiscal year. A break-up of the NPAs shows that 21 public sector banks (PSBs) saw their bad loans pile grow by Rs 1.19 lakh crore (or 15.4 percent) to Rs 8.97 lakh crore in the March 2018 quarter, compared to December 2017’s figures, while that of 18 private banks surged by Rs 19,446 crore or 17.9 percent to Rs 1.28 lakh crore in the March 2018 quarter from Rs 1.09 lakh crore in the December 2017 quarter. Industry leader, the State Bank of India (SBI), which tops the NPA chart, has logged an increase of Rs 24,286 crore in bad loans in the March quarter to Rs 2.23 lakh crore. The Nirav Modi scam-hit Punjab National Bank (PNB) has reported the maximum rise of Rs 29,100 crore in gross NPAs to Rs 86,620 crore in the March quarter. Barring the Bank of India (BoI) and Oriental Bank of Commerce (OBC), most other PSBs’ also recorded a rise in bad loans during the quarter. ICICI Bank’s bad loans pile grew by Rs 8,024 crore or 17.4 percent in the March 2018 quarter to Rs 54,063 crore; Axis Bank’s widened by Rs 9,248 crore or 37 percent to Rs 34,249 crore in the March 2018 quarter from Rs 25,001 crore during the December 2017 quarter. The total loans of public sector banks are 2.9 times the total loans of private sector banks. But their bad loans are 7.5 times that of private banks. If both these set of banks were equally well run, then the two ratios just referred to, wouldn’t have been different. If the government wants to promote economic activities, then there is need to streamline the banking system instead of taking the easy way of averaging losses by forced mergers. The big sharks are allowed to take colossal amount from banks as loans and when they don’t repay, nothing is done. This is in sharp contrast to the ordinary citizens who are hauled to courts and their properties seized if they failed to return the pittance they took as loans.