A group of academics and civil servants on Wednesday presented a report on the worsening situation of the banking industry and irregularities owing to non-collection of debts worth billions of rupees from big corporate houses.
The report 'Unfolding Crisis: The case of rising NPAs and sinking public accountability', was made public here and discussed by a panel comprising Sitaram Yechury, CPI-M chief and Rajya Sabha member; Mohan Guruswamy, fellow, Observer Research Foundation (ORF); Indira Rajaraman, former member of the 13th Finance Commission; and Yogendra Yadav, co-founder Swaraj Abhiyan and Senior Fellow at Center for the Study of Developing Societies (CSDS, among others.
"From a mere Rs 50,517 crore in March 2007, NPAs (Non Performing Assets) in Indian banks have risen to an eye-popping figure of Rs 5,41,763 crore in March 2016... in a period of six months between September 2015 and March 2016 the amount of NPAs shot up by a staggering 46 percent!," a statement issued by PFPAC (Public Finance Public Accountability Collective), the collective which has put together the report, said.
PFPAC is a body consisting of several individuals and NGOs, from around the country who are devoted to analyze the financial ecosystem i.e. lending practices, irregularities, of the nation to the benefit of common people.
The report argues, among other things, against the lending practices, criteria of sanctioning of loans, repayment terms and conditions, and collateral secured against the loan by the banks. It also criticised banks for extending loans to corporate houses against virtual assets which cannot be redeemed.
"'Virtual assets' ... shares of promoter companies, shares of subsidiary companies, brand name of companies, etc... State Bank of India (SBI) had the audacity to provide Kingfisher Airlines loans worth Rs 7,723 crore against collateral that included the Kingfisher Airline brand for Rs. 4,111 crore," the statement said.
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"It is very obscene to see that as Kingfisher owed more than Rs 9,000 crore to the Indian banks, it's owner Vijay Mallya was flying around in jets with calender girls," Yechury said.
He also told about a letter he wrote to Prime Minister's Office (PMO) about which he never heard back.
"Poor are being made to pay for the profligacy of the rich. The fact that government doesn't have any plan on how to deal with this issue, smacks of crony capitalism... who got how much kickbacks will be exposed in the time to come, but what are we to do now?" he said.
"Not just from the moral point of view but from an economic point of view it is important that we resolve this issue (wilful defaulting on loans by corporates) for a better India," he added.
Praising the work done by PFPAC in exposing the lacunae in the lending practices of nationalised banks when it comes to big corporates houses, Yogendra Yadav said, "In the last few months we heard some most obnoxious rhetoric on the issue of nationalism, where are these people now.. I think this issue should evoke more fervent nationalism in the people.. This is an extraordinary work and we need it to be disseminated through whatever means possible to every street."
Guruswamy also spoke against the government's role in arbitrating between banks and corporate houses.
--IANS
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