The All India Bank Employees' Association (AIBEA) plans to observe December 5, 2013, as All India Day, demanding a remedy to the rising bad loans, alleging the alarming increase in bad loans in Public Sector Banks (PSBs) is due to the big and corporate borrowers.
The bad loans in PSBs has risen from Rs 39,000 crore in March, 2008, to Rs 1,64,000 crore in March 2013 and the bad loans have been restructured and shown as good loans and they amounted for Rs 3,25,000 crore. Of the restructured loans, Rs 2,70,000 crore was in favour of corporate borrowers.
"If we include the bad loans in private banks, foreign banks and other financial institutions, the total bad loans are over Rs 2,50,000 crore," said a leaflet from AIBEA.
C H Venkatachalam, general secretary, AIBEA, said, the association would release the names of the top defaulters at a press meet on December 5 as part of the protest. It would also demonstrate across the country over six demands - to publish the list of loan defaulters of Rs 1 crore and above; make willful default of bank loan a criminal offence; order investigation to probe nexus and collusion; amend recovery laws to speed up recovery of bad loans; and take stringent measures to recover bad loans. It also didn't want corporate delinquents to be incentivised.
The provisions made for bad loans from the profits earned by the banks has been growing and it has grown from Rs 11,121 crore in 2008-09 to Rs 43,102 crore in 2012-13, accounting for Rs 1,40,266 crore as provisioning during the five years.
From 2008 to 2013, the banks' gross profit before provisions for bad loans was at Rs 3,58,893 crore of which the provisions made for bad loans was Rs 1,40,266 crore, leaving the banks with net profit of Rs 2,18,627 crore.
Meanwhile, the provision coverage ratio has been falling, making banks more vulnerable and susceptible to risks against loan losses and compared to the provision coverage ratio of 68 per cent as on March 31, 2012, it fell to 62 per cent by March 31, 2013.
"According to the RBI, the ratio in the entire banking system has fallen from 55 per cent to 45 per cent while the global average ratio is 70 per cent to 80 per cent," it said. A list of Non-Performing Asset (NPA) provision coverage, the ratio of provisions made against gross NPA by the association shows that Allahabad Bank and Andhra Bank had a coverage of 74 per cent and 71 per cent as on March 31, 2012, which has fallen to 50 per cent each as on March 31, 2013. Bank of Baroda had a coverage of 80 per cent as on March 31, 2012, which has fallen to 68 per cent as on March 31, 2013, according to the data.
The association says, while the bad loans used to be explained as legacy issues, money stuck in some old accounts and similar to that, the fresh bad loans added in the last four years was Rs 3,15,465 crore. It said that according to the RBI, the banks have added Rs 4,94,836 crore to their bad loans from 2007 to 2013.
Dad loans of Rs 1,41,295 crore were written off during the period 2007 to 2013, and most were in favour of the big defaulters and corporate borrowers, it alleged.
