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Banks continue to suffer on account of bad loans or Non Performing Assets(NPAs) as can be understood from the figure which increased from Rs 9,190 crore in 2011-2012 to Rs 2,16,739 crore in 2013-2014, according to RBI. The figure shot up by 2016 to a little over Rs.6 lakh crore. After re-adjustment with bank charges etc, the NPAs in Indian banks, specifically in public sector banks, are valued at around Rs 4,00,000 crore, which represents 90% of the total NPA in India, with private sector banks accounting for the remainder. Defaulters are mainly big corporate houses and in particular the big names such as Vijay Mallya and Nirav Modi etc among such. Why banks continued to lend such colossal amount of public money to borrowers is because the 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. Hence, they go easy on giving loans to borrowers who are likely to default. Despite projections of a recovery, 18 SCBs, including all public sector banks under the prompt corrective action (PCA) framework, may fail to maintain the required capital adequacy ratio under a two SD (standard deviation) shock to the Gross Non Performing Asset( GNPA) ratio, unless capital infusion takes place and banks improve their performance, according to RBI’s analysis. The PCA banks are Allahabad Bank, United Bank of India, Corporation Bank, IDBI Bank, UCO Bank, Bank of India, Central Bank of India, Indian Overseas Bank, Oriental Bank of Commerce, Dena Bank and Bank of Maharashtra. In simple terms, genuine entrepreneurs who seek loans are made to suffer months of running around and ultimately compelled to curtail their requirement by even 50% on account of not having the required collateral. Of course, given that public sector banks give out more loans, it is not surprising that their bad loans are more. The total loans of public sector banks are 2.9 times the total loans of private sector banks. However, their bad loans are 7.5 times that of private banks. Every government has its favourite set of industrialists and this ultimately leads to the public sector banks and in the process the taxpayer, picking up the bill for this politician-businessman nexus. These data points tell us that India’s public sector banks are inefficiently run. This inefficiency has cost the government a lot of money over the years. Between 2009 and March 2017, the government has had to invest close to Rs 1.5 lakh crore in these banks to keep recapitalising their capital, in order to keep them going. Indeed, this is a lot of money and could have gone towards other worthy causes. The basic problem with public sector banks is political meddling. The RBI’s stance was at odds with this age of digital transparency since the All India Bank Employees Association had published the list of defaulters. Today as things stand, it is quite surprising that while the RBI makes every effort to assuage concerns yet it does not do the most logical thing- to disclose those big time defaulters who have caused the nation such colossal losses by defaulting on payments. Instead, the big time borrowers besides wilfully defaulting on repayment of loans, are given more loans in order to stay afloat.<\/p>\n
Financing defaulters<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[685],"tags":[],"class_list":["post-177994","post","type-post","status-publish","format-standard","hentry","category-editorial"],"_links":{"self":[{"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/posts\/177994","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/comments?post=177994"}],"version-history":[{"count":0,"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/posts\/177994\/revisions"}],"wp:attachment":[{"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/media?parent=177994"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/categories?post=177994"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/tags?post=177994"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}