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With stressed assets reaching alarming proportions, the All India Bank Employees' Association wants recovery of bad loans on a war-footing. The Association feels that resolution of bad loans via the Insolvency and Bankruptcy Code (IBC) is a bail-out for defaulting corporates at the cost of depositors' money.
“The banking sector has entered a danger zone with non-stop increase in bad loans. Non-performing assets are more than ₹15 lakh crore. The Government recently admitted in a written reply in Parliament that there are 9,063 wilful defaulters who together owe ₹1,10,050 crore to the banks.
“From AIBEA, we have been demanding that at least the wilful defaulters should be brought under criminal proceedings. This is being deliberately skirted and avoided,” alleged CH Venkatachalam, General Secretary, AIBEA.
He said the long pending demand to publish the names of the bank loan defaulters is yet to be accepted by the Government and the RBI.
"Even in the past also, there has been velvet treatment to the defaulters – one time settlements, interest waivers, compromise settlements, rescheduling, restructuring,..., write-off, etc.
"For the small borrowers, farmers, students, etc. the recovery laws are stringent and they are being unduly harassed. For the big borrowers, it is concessions all the way,” the AIBEA General Secretary said.
Venkatachalam observed that while AIBEA wants recovery of bad loans, the Government talks of resolving bad loans.
“IBC is their resolution module. But the RBI has already indicated that in this processes there would be steep haircuts. The haircut is clearly visible now,” he added.
Referring to the case of Bhushan Steel, where the loan outstanding referred to the National Company Law Tribunal (NCLT) was ₹56,000 crore, the Association general secretary said the Tatas have taken over this company for ₹35,200 crore, leading to the resolution of one NPA account. But banks have lost ₹21,000 crore. That is a haircut of nearly 40 per cent.
Venkatachalam elaborated: "Then came the Electrosteel Steels deal. The dues to the banks were ₹13,600 crore....Vedanta has purchased it for ₹5,320 crore....banks sacrificed ₹8,400 crore. The haircut is 60 per cent.
"Now comes the Alok Industry deal. The company owes ₹30,000 crore. Reliance takes over the company for ₹5,000 crore...Banks sacrificed ₹25,000 crore. The haircut in this case is 83 per cent...This is just the beginning. More such deals will follow soon.”
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