Maharashtra Today Investigation
Mumbai: After blowing the lid off the mid-sized companies defaulting on whopping loan amounts running into hundreds of lakhs, here comes the list which surpasses all odds – thousands of crores on each defaulter!!! In the first part of the series, Maharashtra Today accessed the documents which showed that majority of the companies have been sitting on bad loans going as high as Rs 300 crores. The fresh list accessed by MT now puts up major defaulting sharks in the dock. As many as 50 big corporates including Vijay Mallya’s now defunct Kingfisher Airlines are found to be defaulting on mega loan amount of over Rs 40,000 crores, most of which have turned into bad debts. Moreover, the bad loans from the public sector banks reached Rs 4,94,836 crores in just 7 years i.e. from 2007 to 2013. Whereas in private sector banks, the net amount of Rs 46,000 crores were defaulted in just 4 years, from 2009 to 2013. If both the defaulted loan amount from public and private sector banks are taken into account then it would well touch 5.5 lakh crores defaulted loan. The net amount involved in 30 bad loans stood at Rs 70,300 crores. This situation has hinted at more serious implications on the country’s economy.
Topping the list is Vijay Mallya’s now defunct Kingfisher Airlines which owes Rs 2673 crores to various banks, followed by Winsome Diamond and Jewellery Co. Ltd which defaulted the amount of Rs 2660 crores. Many others like Electrotherm India Ltd, Zoom Developers, Sterling Biotech Ltd and S. Kumars Nationwide are included among the top 50 loan defaulters which sank a total of over Rs 40,528 crores of various banks.
Banks wrote off Rs 2,04,000 cr !!
While the figures may jerk up the sentiments of economists, it would also deal a big blow to aam aadmi who is still hopeful of achche din! During the period from 2001 to 2013, the bad loans amounting to Rs 2,04,000 crores were written off. In November last year, a controversy arose over SBI reportedly writing off loans worth Rs 7,000 crore including that of Vijaya Mallya promoted Kingfisher Airlines. Then, the government and the bank maintained that there was no loan waiver and the liability on the borrowers still remains. However the above loan write off of Rs 2,04,000 crores clearly indicates the gross leniency that was given to the defaulters.
Top 4 accounts sit on 22,000 crores
An amount of Rs 68,000 crores of various public sector banks, owed by Gross Non Performing Assets (NPAs) of above Rs 1 crore account are stuck up. Of these, Rs 22,000 crores alone are gulped by top 4 account holders in public sector banks. Similarly top 4 accounts in private sector banks are sitting on Rs 4,600 crore of bad loans. The banks however overlooked the continuous glitch and made provision of Rs 1,40,000 crores for bad loans, during the period from 2008 to 2013. This was the same period when the global economy faced the worst recession in the known history.
Gross NPA doubled in just 1 year!!!
Talking about Gross Non-Performing Asset in public sector banks, the document puts Allahabad Bank with gross NPA of Rs 5137 crores in Mar 2013. Surprisingly the gross NPA of this bank in March 2012 was Rs 2058 crores, which means it just doubled up in just one year! Similarly Punjab National Banks gross NPA sprang up from Rs 8719 crores in 2012 to 13465 crores in 2013. The total Gross NPAs in all public sector banks including nationalized banks were Rs 1,64,461 crores, in March 2013. Around the same period, Gross NPA stood at Rs 21,069 crores in private sector banks.
For the uninitiated a nonperforming asset (NPA) refers to a classification for loans on the books of financial institutions that are in default or are in arrears on scheduled payments of principal or interest. Gross NPA is the total number of NPAs of the bank simply added. Banks would continuously assess this by evaluating their loan payments and decide the NPAs. When the NPA occurs, it is not just an interest income loss to the bank, but a principal loss as well. For example, if a bank has lent Rs 100 crores to a company with an outstanding loan amount of 60 crores, then the bank would lose these 60 crores along with the future interest payments as well, when the company goes bust. Now this is a serious loss to the bank.
Maharashtra Today View
A close look at the amount each defaulter owes to various public and private sector banks clearly gives an idea why the government was reluctant to make these heavily supplemented bad loans public. Despite the Supreme Court’s ruling, the government chose to hide the list from the people who are struggling to cope up with the forcefully imposed cashless society upon them. It is shocking and beyond understanding why neither the Reserve Bank of India nor the concerned bank authorities or the government officials initiated anything in the nick of time to prevent such a mammoth loan scam.
On one hand the banks filled up their coffers with the hard earned money of common people via demonetization channel, it has remarkably been defaulting on recovering these bad loans which can run the entire country’s economy for the next few years. It is highly expected from Prime Minister Narendra Modi to look into this matter of high importance, in the light of his prompt action on black money and benaami properties. The country needs certainly better than this.