Recently, while we got busy with boycotting a movie, an important revelation was made in parliament.
Government forwarded key data points on new age bank robbers.
These robbers aren’t like anything you have seen. They arrive in broad daylight and are welcomed by bank. Here we are awaiting merely 15 lakhs, while these got away with 1500 crores. This has been going on for years now.
But, now at least RBI has pointed it out and there is ongoing debate-discussion in parliament.
Let’s look at the RBI data :
Let’s take into account the top 50 Wilful Loan Defaulters, total Loan amount – Rs92,570 crores to be exact for only these top 50 defaulters. Out of these 50 many are out of reach of govt. as they have settled abroad. Others are fighting in the court.
If a small, middle class person is unable to pay one EMI the bank gets after them. Mehul Choksi’s Gitanjali Gems defaulted 7,800 crore topping the list of wilful defaulters. Choksi is now a citizen of Antigua – nothing much can be done by government. However, govt. has succeeded in trying to bring back defaulters like Vijay Mallya and Nirav Modi.
Second positioned in the RBI list is ERA infra, defaulted 5879 crores. According to a report by ED, the ERA infra model was simple – take in money from all directions. Hem Singh Bharana of ERA infra is also allegedly involved in another 16,000 crore scam.
Third placed REI Agro Ltd. defaulted 4,803 crores. Directors Sanjay and Sandip Jhunjhunwala were eyed by CBI for years, the case is ongoing and remains to be seen what happens. One thing is common in all cases – defaulters’ lawyers are expensive and exceptional.
Other defaulters in the list include: Concast Steel and Power Limited – Rs4,596 crore scam, ABG Shipyard Limited – Rs3,708 crore scam, FROST International Limited – Rs3,311 crore scam. But these numbers can be misleading because banking scam may be bigger.
For the common people, Christmas comes once in every year, but for some people, banks became Santa 365 days a year. For example – Rishi Agarwal, founder of ABG shipyard, was recently arrested in 22,842 crore fraud involving 28 banks like SBI, IDBI and ICICI among the lot, between 2012 and 2017.
How banks became Santa?
ABG Shipyard was procuring loans since 2005 which were declared Non Performing Asset (NPA) in 2013. Since ABG Shipyard could not return money, it was marked NPA in 2013. But if you check balance sheet of ABG Shipyard after this time, you can find long term borrowings like, March 2014 – Rs2,900 Crore, March 2015 – Rs4,356 Crore, March 2016 – Rs5,019 Crore. In fact, in 2015-16 annual report, ABG Shipyard took loans and overdraft facility to fulfil company commitments.
When money was already NPA in 2013, how come loan and overdraft facility provided to the company? Small, middle class people, farmers may sleep empty bellied but try to be on time for EMI – on the other hand, we have 50 Wilful Defaulters who can pay back, but not doing so, showing no intention of paying back.
And, banks and high profile loan defaulters have complicated relationship. On 31 March we calculate our income and pay taxes. After paying GST, income tax, cess, surcharge if we miss one EMI by one day, banks turn into Arnab Goswami. When these big people are not being able to retrieve huge sums of money back, the banks also refuse to share name of defaulters.
A wanted poster may be hurled in search of common defaulter but for 5000 crore defaulter not even the name revealed. Because then it would also reveal how loan was given – the list of defaulters is long.
Pune based Vivek filed an RTI to know the number of high profile cases. Loan Default Cases – there are 312 Wilful Defaulters whose loan amount is more than Rs100 Crore, and the outstanding amount of these defaulters in totality is Rs1.41 lakh crore.
RBI data shows 11 corporate defaulters got loan from SBI and Public sector bank. Interestingly, all these companies were already declared NPA – still they got loan approval. How did this happen? Who is responsible? You, as a common man, dare to miss one EMI and see what happens. You will be asked to explain why you failed to be on time.
So, you’ve understood that there is something wrong as far as giving out loan is concerned, but things are also not right with English, logic and maths.
Time To Repay
Banks give many avenues to big people to pay back like – loan restructure, changing of payment plans, interest waiver etc. Then, when every way fails, it is declared bad debt. After 90 more days this is then called a Non Performing Asset. In our case, banks won’t be this patient. For big clients, banks write off the NPA as it looks bad on the book. Literally erased off the book! In one way, this is giving away money but if you say so you will be called illiterate, anti-national. Nirmala ji will be especially angry, as finance department believes that bad debt or write off do not change anything – all attempts to recover money will be made.
Banks and govt. say that write off is not loan waiver, but how much money is recovered, since we are on the subject, let’s discuss that:
As per one RTI report, SBI has written off 1.45 lakh crore had loans and retrieved 19,678 crores only (15% is the recovery according to data). It’s like getting money back from a friend who borrowed money 10-15 years back. Despite all that, banks try to save the big people in the name of privacy (this is not for us). For small people like us privacy is non-existent.
The amount of wilful loan default has grown 10 times since 2012. These are people who can pay back but aren’t willing – and the total default amount is Rs2.4 trillion (2.7 times of 2022 health budget). You may now ask, what does it matter to small people in matters of big people?
But banks have to get that money from somewhere. Frauds and scams impact stock value of bank. Also, loan rates and service charges increase, interest rate decline, charges levied on services, charges for cheque book, ATM, message alert. At the end, we have to pay for defaulters, banks have to get that money from somewhere you know.
If public demands to know who is responsible for giving out big loans and who lets them get away – the banks will treat small customers with more respect.
[Images from different sources]
Mahabahu.com is an Online Magazine with collection of premium Assamese and English articles and posts with cultural base and modern thinking. You can send your articles to firstname.lastname@example.org / email@example.com ( For Assamese article, Unicode font is necessary)