Current Affairs

The Daylight Bank Robbery

In the mega loot of the banks in the country involving over 10,000 businessmen, 42 banks, over Rs 1 lakh crore out of Rs 8 lakh crore of NPAs have gone for sure! GoaChronicle.com brings to you the investigate report of its associate partner The Correspondent which carries the names of willful defaulters who have usurped approx Rs 60,000 crore exposing the unholy banking-business nexus.

With a mindboggling amount of Rs 8 lakh crore non-performing assets (NPAs) stuck in the balance sheets of the Indian banks, they are at a loss of words to explain how the colossal figures were reached.

The banks were are putting up a brave front, hoping to recover these NPAs. We are still made to believe that all is not lost. An NPA should ideally become a bad loan in three-six month period, and thus enable the banks to start recovery process.

They have been glossing over their balance sheets, and tossing the figures for public consumption. As the first step to palm off the figures, the banks are changing their accounting entries by discreetly writing off NPAs as willful defaulted bad loans. The banks have made a consolidated list of willful defaulters of approximately Rs 60,000 crore (though the RBI admits the willful default is to the tune of Rs 1 lakh crore) and submitted it to the RBI, which in turn has forwarded it to the Finance Ministry. How much money they hope to recover by going to the courts is anybody’s guess!

When RK Laxman would have first made the cartoon nearly three decades ago, he would have never imagined that his cartoon would depict the scam of this proportion and amount. Robbers are fools to loot the banks when you could simply join the great Indian loan-loot mela. To take a loan from a bank depends on ones capacity to swindle the books and manipulate the system. Who said anything about repayment! The NPAs kept rising deteriorating their health with each passing season. The Indian Government was contemplating merging major banking operations. Nevertheless it still merged five nationalized State Bank of India subsidiaries.

The Modi Government is under tremendous pressure to present a bright picture before the next elections to the Lok Sabha.

To push the banking system, it even pumped Rs 88,000 core into the system last year. And the next phase of writing off these NPAs would have considerably been delayed had not the Nirav Modi/Mehul Choksi LoU scam not surfaced.

The banks were asked to make their list of willful defaulters (for parties who have the capacity to repay but are unwilling to give back the loan).

The Willful Defaulters list (exclusively available on the www.thecorrespondent.in) contains names of companies, directors and the amounts in Lakhs.

The consolidated list indicates that there is no hope of recovering the amount and banks have to initiate legal process of recovering these amounts. But the question is who should be held responsible for these NPAs/willful defaulters.

Normally, on an industrial loan, the banks keep nearly 125 percent of security, if the project report is very promising and borrowers have creditability or/and goodwill. For example, if a project is of Rs 100 crore, the banks should keep a security of Rs 125 crore to secure their loans besides seeking guarantees.

Ironically, in most cases of loans – other than housing or car loans – the banks keep less or no collateral. For big loans, they don’t even keep original deed papers. It means once a loan is taken with an intention of not returning the amount, the banks have no way of recovering the money. It is a clear loss which is ultimately going from the pocket of the tax payers.

While the vast majority likes to keep a clean record by repaying the money they borrow, it is the minuscule minority that spoils the landscape. This lot of smooth operators is the dangerous variety. They come in wearing business clothes and walk back in fancy cars. Criminals point guns to loot banks, they sign forms.

Modus operandi

The trend in most cases is to take huge loans, more than required for a legitimate business exercise, repay little, take more bigger loans, and then repay minimum and keep getting bigger and bigger loans, in many cases from several banks. Naturally, banking officials have to be in hand in glove with the ‘businessmen’.

And people like Mallya or Modi know when to exit the market. By this time, such borrowers have liquidated their assets, taken out funds from the business, change identities or have pleaded for insolvency or become bankrupt. Chapter closed. And start afresh.

Normally, no harm is done and not many face the axe or land in jail. And if caught, usually, in such cases the high ups get out easy while the foot soldiers landing in jail – as has been witnessed in the Nirav /Mehul case.

There is never any word on who gave blatant sanctions or what action the banks are taking against officials who have handed out these loans on a platter.

‘Name and Shame’ Willful defaulters

The Finance Ministry is nevertheless cracking the whip to lessen the NPA burden. The Banks have started relooking at their loans, NPAs and bad loans. The banks submitted their list of willful defaulters to the Reserve Banks of India, which complied the lists and forwarded it to the Ministry. The ministry is dealing with the lists of these defaulters who have together siphoned off Rs 58,792 crore (part of Rs 1 lakh crore). This is in no way the final list.

The Ministry has asked banks to ‘name and shame’ such borrowers by publishing their photographs and other details in newspapers.

The Ministry instructed all Public Sector banks to take Board approvals for publication of photographs of such defaulters. “Lending institutions shall formulate a policy with the approval of their Board of directors which clearly set out the criteria for publication of photographs of willful defaulters.”

The number of willful defaulters, who did not repay loans to public sector banks despite the capacity to do so, rose to 9,063 at the end of December 2017. This was stated by Shiv Pratap Shukla, Minister of State for Finance, in a written reply in the Rajya Sabha.

The list of willful defaulters with The Correspondent contains only 5,605 defaulters, 3,431 less than the number mentioned in the Rajya Sabha indicating there is another list that has another set of banks.

The 374 pages list, brought out exclusively by The Correspondent, is fully available on the website and is published parts of the list. The names include who’s who of the country’s defaulters. From Kingfisher’s Vijay Mallya to Winsome Diamonds Jewellery Ltd’s Jatin R Mehta, who according news reports also has taken the Nirav Modi exit route from the country.

Incidentally, Mallya name only figures in the SBI’s list of defaulters with an amount of Rs 1201.4 crore. They are the monarchs of loot and fraud. Vijay Mallya (who is set to marry for the third time), Nirav Modi, Mehul Choksi, Jitin Mehta… They claim they are ‘honest businessmen’ who didn’t get a chance to repay their loans and are undergoing media trial.

Happy partying outside the country while investigating agencies, the Central Bureau of Investigation and the Enforcement Directorate, try to find out their whereabouts or pursuing legally, there is no word on how they gloriously ‘skimmed’ the banking industry.

Mallya’s pictures and videos that keep surfacing on the social media are just mocking the law structure showing an ugly picture. The case is of Nirav and Choksi is equally glaring. The agencies have no idea where on Earth they are. Officially they left for the United States, but till date there is no word where they might be.

Incidentally, Winsome Jewellers’ Jatin Mehta, who could not reach the ten thousand crore mark, has also managed to slip out of the country and acquire citizenship of St Kitts Island.

There are some unlucky ones who couldn’t skip out of the country. S Kumars’ Nitin Kasliwal and Zoom’s Vijay Choudary, Surya Vinayak’s Sanjiv and Rajiv Jain are perhaps the biggest scamsters who got caught and couldn’t get out in time. But there are thousands of such scamsters who are out on the prowl, waiting for the right opportunity to strike. Needless to mention, many who have dipped into the cash pot with help of bank officials are enjoying their loot.

Banks who have submitted the Willful defaulters list

State Bank leads the willful default list followed by PNB

Figures in Brackets indicate number of defaulters Figure in crore

Allahabad Bank (30) 487.74

Andhra Bank (283) 2428.47

Axis Bank (126) 993.88

Bank of Bahrain & Kuwait B.S.C. (2) 23.31

Bank of Baroda (192) 1368.79

Bank of Maharashtra (92) 775.55

Catholic Syrian Bank (29) 108.73

Central Bank of India (637) 3028.87

Citibank N.A (4) 18.3

Credit Agricole Corporate & Investment Bank (4) 16.06

Dena Bank (143) 802.3

Dhanalakshmi Bank Ltd. (67) 164.63

Doha Bank Qsc (2) 72.05

Export Import Bank of India (3) 115.37

HDFC Bank Limited (51) 242.67

ICICI Bank Limited (18) 393.53

Indian Bank (36) 1200.27

Indian Overseas Bank (1) 13.80

Indusind Bank Ltd. (120) 899.75

Karnataka Bank Ltd. (7) 60.54

Karur Vysya Bank Ltd. (31) 375.37

Kotak Mahindra Bank (61) 5442.19

Oriental Bank of Commerce (338) 3288.13

Punjab and Sind Bank (24) 244.75

Punjab National Bank 698 9,445

Specified Undertaking of UTI (24) 378.53

Standard Chartered Bank (25) 301.41

State Bank of Bikaner & Jaipur (80) 1609.06

State Bank of Hyderabad (197) 2088.72

State Bank of India (1034) 12091.22

State Bank of Mysore (69) 1029.84

State Bank of Patiala (101) 847.85

State Bank of Travancore (65) 909.76

Tamilnad Mercantile Bank Limited (31) 174.85

The Federal Bank Ltd (196) 803.09

The Jammu And Kashmir Bank Limited (2) 1.22

The Ratnakar Bank Ltd (8) 30.2

The South Indian Bank Limited (40) 524.87

Union Bank of India (611) 2990.87

UTI Mutual Fund (14) 126.28

Vijaya Bank (105) 1894.91

Yes Bank (4) 30.2

Savio Rodrigues

Savio Rodrigues Founder & Editor-in-Chief GoaChronicle.com

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