We have observed how ruthlessly the Government pursued their policy of mergers and amalgamation of banks, though there was absolutely no need for the unwarranted action. What they have achieved through these mergers is also a question mark. We all know that these mergers are only a prelude to their long-term agenda of privatisation.
Similarly, there is the orchestrated propaganda that public sector banks are inefficient and tax payers’ money should not be used to bail them out any longer. But the same protagonists did not utter a single word when SBI’s money/public money was openly used to bail out the failing private sector bank, Yes Bank. This is the double-standard of the people who deliberately criticise public sector banks, who believe in privatizing profits and socializing losses.
Take the issue of bad loans /NPAs. Who are the main culprits? Everyone knows that it is the private sector, especially the big businesses and corporates who are the major defaulters. Why there is no hue and cry when these bad loans are being written off in favour of these corporates? Only recently, RBI confessed that as on 30 September 2019, Rs. 68,607 crores were written off by banks in favour of top 50 corporate defaulters. The advocates of privatisation did not utter a single word about the delinquency of these private corporate borrowers.
In fact, we all know that in the last ten years, from 2009 to 2019, Rs. 10,96,627 crores have been transferred from operating profits of Public Sector Banks towards provision for bad loans. Out of these provisions, Rs. 6,94,037 crores have already been written off. All these beneficiaries are from private sector. Why there is no murmur about this loot of tax payers’ money?
In Parliament, the Government in its written replyhas stated that there are 9331 willful defaulters (all are private corporates) who together owe Rs. 1,22,018 crores to the Banks. Willful default is nothing but deliberate cheating. Still no criminal action is being taken on these cheaters. Why the campaigns of privatisation do not open their holy mouths on this?
The main headache of the banks today is the alarmingly mounting bad loans. What’s needed is strong and stringent measures to recover the bad loans. But the Government does not talk of ‘recovery’. It advocates ‘resolution’. Their mechanism is IBC: Insolvency and Bankruptcy Code.
But all of us know that under IBC, in the name of resolution, the sacrifice and the haircut by the public sector banks is huge. IBC is a beautiful laundry service where bad loans get resolved and the corporate defaulters are relieved without any pain at the cost of the banks and public money.
Here’s a chart to understand just how much money is written off to appease the willful defaulters and burden the tax-payers with more and more corporate bail-outs.
[Source: various]
| BORROWER | LOAN DUE | RESOLVED AT | HAIRCUT | PURCHASED BY |
| ALOK INDUSTRY | 30,200 CR | 5,052 CR | 83 % | RELIANCE |
| MONNET ISPAT | 11,478 CR | 2,892 CR | 75 % | JSW |
| ELECTROSTEEL | 13,958 CR | 5,320 CR | 62 % | VEDANTA |
| JYOTHI STRUCTURE | 8,179 CR | 3,691 CR | 55 % | HNIs |
| BHUSHAN STEEL | 57,505 CR | 35,571 CR | 38 % | TATA |
| ESSAR | 54,000 CR | 42,000 CR | 23 % | ARCELOR MITTAL |
Everyone knows why the private banks were nationalized in 1969. It was because the private banks did not come forward to support the priority needs of the development of the economy. In 50 years, PSBs have done so much more for the country.
Everyone knows the reason why so many private banks were put on moratorium and merged with public sector banks in the last three decades. It is the sheer mismanagement by those private sector banks.
India needs strong, vibrant public sectors banks now more than ever. Public Sector Banks are nation-building institutions. If there are any attempts to alter it or to reverse the clock back, the AIBEA — that is the All India Bank Employees Association, the oldest and largest national trade union centre of bank employees in India — will react appropriately. Let us be on guard. (IPA Service)