AIBEA to name top 50 loan defaulters
04 December 2013
The All India Bank Employees Association (AIBEA) will, on Wednesday, make public the names of the top fifty defaulting borrowers who cumulatively owe about Rs40,000 crore to the banking system.
Bank employees are observing an all-India protest day on Wednesday, 5 December, against increasing bad loans of banks, AIBEA general secretary C H Venkatachalam said.
Bad loans of banks have increased alarmingly over the last few years, he pointed out.
Gross NPAs of public sector banks have increased from Rs39,000 crore at the end of March 2008 to Rs1,64,000 crore as of end-March 2013, while the total amount of bad loans restructured and shown as good loans rose to Rs3,25,000 crore.
Corporates accounted for Rs2,70,000 crore of the restructured loans, Venkatachalam pointed out.
Quoting Reserve Bank figures, he said, banks have added Rs4,94,836 crore to their bad loans between 2007 and 2013.
The increase in bad loans of banks has been due mainly to an unholy nexus among borrowers, banks and political administration, he pointed out.
"If we include the bad loans in the private banks and foreign banks and other financial institutions, the total bad loans are more than Rs2,50,000 crore," AIBEA said in a leaflet.
C H Venkatachalam, general secretary, AIBEA, said that the association would release the names of the top defaulters in a press meet on 5 December. As part of its protest AIBEA would conduct demonstrations in various parts of the country raising six demands:
- Publish list of bank loan defaulters of Rs1 crore and above;
- Make willful default of bank loan a criminal offence;
- Order investigation on the nexus and collusion; and
- Amend laws to speed up recovery of bad loans and take stringent measures to recover bad loans.
The bank employees union also demanded that the government should not incentivise corporate delinquency.
Meanwhile, banks' provisioning for bad loans has been steadily growing, and, over a four-year period between 2008-09 and 2012-13, this has grown four-fold from Rs11,121 crore to Rs43,102 crore, according to AIBEA.
The provisioning made for bad loans from the profits earned by the Banks has been growing and it has show a growth from Rs11,121 crore in 2008-09 to Rs43,102 crore in 2012-13, taking the total provisioning for bad loans in the five years to Rs1,40,266 crore.
In a period between 2008 and 2013, banks' gross profit before provisioning for bad loans stood at Rs3,58,893 crore, of which provisioning for bad loans was Rs1,40,266 crore, leaving banks with a net profit of Rs2,18,627 crore.
Meanwhile, the provision coverage ratio of NPAs of banks has seen a decline as banks continue to restructure bad loans, making the banks still more vulnerable and susceptible to risks against loan losses, according to the bank employees union.
Against the provision coverage ratio of 68 per cent as of 31 March 2012, provisioning for bad loans of banks has come down to 62 per cent by 31 March 2013.
"According to 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 to 80 per cent," it said.
AIBEA will also stage a strike on 19 December across the country to protest against the government's alleged move to reduce the stake of government in public sector banks, which, it said, would further jeopardise the banking system.