PAC to probe banks’ loan defaults, summons officials of four PSU banks

22 Feb 2017


The Public Accounts Committee of Parliament has summoned top officials of Indian Bank, Indian Overseas Bank, Allahabad Bank and UCO Bank to seek details of their major loan defaults and find out ways to recover these.

The PAC, headed by Congress MP K V Thomas, is keen to find out the details of huge loans given by the banks to corporates, including the basis on which such favours were extended, according to sources.

With banks not forthcoming in parting with information about the big defaulters, the Parliamentary panel plans to take on the job of probing whether the loan amounts have been diverted for purposes other than what the defaulters have sought the loans for.

For this, the PAC has decided to go beyond the national capital and meet the bank officials in Chennai and Kolkata. Since Indian Bank and Indian Overseas Bank are headquartered in Chennai, the officials will appear before the PAC in the Tamil Nadu capital on 27 February.

Later, the representatives of the Allahabad Bank and the UCO Bank will appear before the panel in Kolkata on 1 March. Local officials of the finance ministry will be involved in the discussions with bank officials at the two meetings, sources said.

PAC, which usually reviews the reports of the Comptroller and Auditor General of India presented to Parliament, has also taken on the job of probing bad debts or NPAs of public sector banks.

The move comes after Reserve Bank deputy governor cautioned banks over their mounting bad loans and sought immediate remedial measures.

While banking sources say that any NPA over 5 per cent presents an alarming situation, PSU banks in India are nursing bad loans of over 20 per cent of their outstanding loans.

According to official data, as of 31 December 2016, Indian Bank had gross NPAs of 7.69 per cent and net NPA of 4.76 per cent, Indian Overseas Bank had gross NPA of 22.42 per cent and net NPA of 14.32 per cent, Allahabad Bank had gross NPA of 12.51 per cent and net NPA of 8.65 per cent and UCO Bank had gross NPA of 17.18 per cent and net NPA of 8.99 per cent.

At a PAC meeting on 10 February, financial services secretary Anjuly Chhib Duggal avoided naming big defaulteers despite members expressing concern over the high percentage of NPAs in public sector banks.

When some members pointed out that NPAs of the public sector banks had risen to 12 per cent, the financial services secretary replied that this was due to bad debt getting properly defined and now showing in the books.

Obviously, neither banks nor the government is ready to point fingers at big defaulters, especially corporates while banks disclose smaller debt of the common man.

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