Money & Banking
AIBEA demands detailed probe of top 400 bank loan defaults

In view of the rising bad loans in state-owned banks, the AIBEA said the RBI should periodically publish the list, the union government should amend recovery laws and take criminal action against wilful defaulters

The All India Bank Employees' Association (AIBEA), while revealing wilful defaults worth Rs70,300 crore in 400 loan accounts in public sector banks (PSBs), has demanded a detailed probe in to the loan sanctioning and loans turning into bad assets.


“Why these loans are not coming back? Who is responsible and accountable? If the bank executives have given the name, let there be a probe. If there is a political nexus, let it come out. Country should not be for somebody’s default. People should not be punished for corporate default,” said CH Venkatachalam, general secretary of AIBEA in a statement.


According to the bank employee's union, over the past seven years, there are fresh bad loans worth Rs4.95 lakh crore only in PSBs, while during the same period, these lenders wrote off bad debts worth Rs1.4 lakh crore. Gross non-performing assets (NPAs) and bad loans in the PSBs have increased to Rs1.64 lakh crore as on 31 March 2013 from Rs39,000 crore as on 31 March 2008.


AIBEA also launched a nation-wide campaign that stresses on three key point, like the Reserve Bank of India (RBI) should periodically publish the list, the union government should amend recovery laws and take criminal action against wilful defaulters.


Earlier in December, the bank union had pointed out that the top four bad loan accounts add up to a massive Rs22,666 crore, which include Kingfisher Airlines and Winsome Diamond and Jewellery Co. The Vijay Mallya-owned and now defunct carrier is the biggest defaulter and owes Rs2,673 crore to PSBs. Mumbai-based Winsome Diamond and Jewellery Company (erstwhile Su-Raj Diamond India Ltd), with dues of Rs2,660 crore, is the second highest defaulter, followed by Electrotherm India Ltd at Rs2,211 crore, the union said.


Some of the other big-ticket defaulters include, Zoom Developers Pvt Ltd (Rs1,810 crore), Sterling Biotech Ltd (Rs1,732 crore), S Kumars Nationwide Ltd (Rs1,692 crore), Surya Vinayak Industries Ltd (Rs1,446 crore), Corporate Ispat Alloys Ltd (Rs1,360 crore), Forever Precious Jewellery and Diamonds (Rs1,254 crore), Sterling Oil Resources Ltd (Rs1,197 crore) and Varun Industries Ltd (Rs1,129 crore).


Here is the list of top 406 bank defaulters...

Source: AIBEA

In addition, the bank employee association also wants responsibility fixed on banks’ top brass for the loans that have turned bad, allow banks to share information on NPAs and wilful defaulters under the Right to Information (RTI) Act, and declare wilful loan default as a criminal offence.


Pointing out that the credit appraisal committees of public sector banks had powers to sanction single loans up to Rs400 crore in the case of large banks and up to Rs250 crore in the case of small banks, Vishwas Utagi, General Secretary, Maharashtra State Bank Employees Federation, an affiliate of AIBEA, had alleged that promoters of large defaulting companies diverted bank loans into real estate and floated cricket outfits for competing in domestic league matches.


Speaking with reporters in Mumbai, Mr Utagi alleged that NPAs of banks were the money fraudulently siphoned off from the banking system. Demanding strong legal remedies by the government and the regulators to redeem these public funds, he said, “Banks are dealing with the hard-earned savings of the people, and today the total deposits in banks in India have crossed Rs75 lakh crore.”


According to the Union, over the past seven years, there are fresh bad loans worth Rs4.95 lakh crore only in PSBs, while during the same period, these lenders wrote off band debts worth Rs1.4 lakh crore. Top four defaulters of state-run banks constitute Rs23,000 crore of NPAs, the AIBEA had said.


In order to highlight the increasing bad loans or non-performing assets (NPAs) menace in PSBs, the bank employees observed 5 December 2013 as 'All India Demands Day' by wearing badges and holding rallies.



Veeresh Malik

3 years ago

It appears that even these numbers are under-stated, in as much as they rely on what the Association has been able to lay their hands on, as they do not include other outstandings from these corporates which are hidden in Fund Based, non-Fund based, interchangeable, ever-greening of loans, fake Fixed Deposit Receipts, "secured" against assets which do not exist or have been mulit-mortgaged.

Then there are losses to the Consolidated Fund of India on dues pertaining to Income Tax, Service Tax, EPFO and similar - all adding up to money that should be in the treasury of the Government of the People of India.

The REAL investigation that needs to be done is, mercilessly, on the banks and the regulatory Ministries.

I would hazard an educated guess basis some dipsticks that are reliable, that the actual figure due would be 3 to 4 times the sum mentioned below. At the very least.


Nagesh Kini

In Reply to Veeresh Malik 3 years ago

Not just a mere "merciless" but more ruthless one carried out by genuinely dedicated forensic audit not necessarily from the Big 4 but veteran home grown bank audit veterans with adequate bank audit experience and not just of corporate audits.
Yes the numbers are grossly understated, they don't include non-fund based and other LCs and Guarantees that devolve.

Nagesh Kini

3 years ago

There is absolutely no need to waste further time and money in probes of any kind.
1. Before what little is left of the securities with the lending bankers all their assets primary and collateral as well as guarantees have to be encashed under third party expert supervision preferably under court oversight.
2. The project report scrutiny and high pressure brought to bear from MOF, netas and babus and the role of the CMDs, EDs and top level executives has to be ascertained and action initiated.
3. Siphoning of funds through diversion and misapplication can be ascertained based on withdrawals should be recalled.
4. There is no time left, it is running out and assets and promoters will disappear!


3 years ago

This may be four decades too late


3 years ago

AIBEA & Officers leadership also connived with Bank officials because in all PSB's one officer and one award staff leader was also sitting in the Board.

Rajesh Darak

3 years ago

I agree with the demands of AIBEA.

Transport Sector, jammed by Rules

A plethora of transport rules, Acts, orders and circulars clog the system

Afew days ago, a friend of mine, Rakesh Aggarwal, had a hearing at the offices of the Central Information Commission regarding the Delhi government’s department of transport. His 26 RTI applications had been pending for about three years. All these pertained to day-to-day issues faced by people who use public roads in India. I was lucky enough to be present with him at this mega-hearing which took half a day. People from the transport department and a lot of ordinary citizens were present. While the applications related to the national capital region (NCR), the issues have relevance on an all-India basis. For example:
     Status of high security number plates and reasons for what appears to be a major chaos in the implementation of this process.

     Multiple permits and licences given to persons with same name / same parent name / same address / same or different photo.

     Information on lack of usability of the website which is impossible to navigate.

     No clear information on the circulars, orders, miscellaneous notices, notices, laws, rules, etc, as applicable on any given date.

     Non-compliance with facilities for disabled people at their offices and locations for many aspects including acceptance of RTI applications.

     Information on laws of India pertaining to vehicles exempted from displaying registration marks—like those given to some citizens like the president of India and others.

     Information on Indian laws pertaining to special facilities granted to some citizens, like government servants, over others in the context of out-of-state vehicles.

     Information on laws regarding definition of terms like VIP/VVIP when the Motor Vehicles Act defines only ‘motorists’ and all citizens are equal.

     Wearing of uniforms by staff of the transport department while on duty and display of proper identities.

     Some specific information required regarding anti-citizen and anti-public treatment of public transport vehicles and drivers/operators.

Road transport in India comes under the concurrent list of Centre-state subjects, so there is no clarity on who is really responsible for what. Hence, I am moving towards seeking some specific information and accountability therein, along these lines.

a)    First, the ministry of road transport & highways needs to proactively take on the responsibility of collecting all applicable circulars, rules, orders, miscellaneous and similar, which are issued on a national basis because of any reason or order by Supreme Court, other courts, directions, NHAI, other Central government, armed forces, customs, land borders, etc, and place them online on their website twice a year in English and Hindi.

b)    Second, the state-level transport departments need to take all the above into account and place them on their respective websites in the relevant regional languages as well as collect all state-level circulars, rules, orders, miscellaneous and similar and place them online four times a year.

c)    Third, the district and RTO-level transport departments need to collect all national and state-level circulars, from (a) and (b) above, miscellaneous and similar orders, and add to them all district/RTO level circulars, orders, miscellaneous, etc, issued by them. These should also be placed online or made available at their offices several times a year, in English, Hindi and applicable regional languages.

d)    Fourth, if these three levels of transport authorities cannot do this, how do they expect citizens to be able to adhere to the plethora of rules, Acts, orders, circulars, etc? This is the basic question under RTI.

I would like some help from people all over India on how the RTI Act  is being applied at their local RTO/transport offices, viz., how easy is it to file an RTI application, to start with.

Veeresh Malik started and sold a couple of companies, is now back to his first love—writing. He is also involved in helping small and midsize family-run businesses re-invent themselves


HDFC FY14 net profit up 12% to Rs5,440 crore

For FY14, HDFC reported higher net profit of Rs5,440 crore following growth in its loan portfolio by 16% and revenues by 14%

Housing Development Finance Corporation Ltd (HDFC) reported higher full year net profit mainly on increase in its loan portfolio and revenues.

For the 12 month to end-March, HDFC said its stand alone net profit increased 12% to Rs5,440 crore from Rs4,848 crore, while its total revenues, including interest income, grew 14% to Rs24,143 crore from Rs21,113 crore, a year ago period.

The private sector housing lender said during FY14 its net interest margin (NIM) increased 4.1% and spread on loans stood at 2.29%.

As on 31 March 2014, total assets of HDFC increased 16% to Rs2.25 lakh crore from Rs1,95 lakh crore a year ago period. Gross loan book of HDFC increased 16% to Rs1.97 lakh crore from Rs1.70 lakh crore. It sold loans worth Rs6,944 crore during the quarter.

Its individual loan book grew 26%. HDFC's total borrowing during the year also increased 16% to Rs1.84 lakh crore to Rs1.58 lakh crore a year ago period.

As on 31 March 2014, HDFC's capital adequacy ratio (CAR) stood at 17.9%, gross non performing assets (loans) ratio (GNPAs) stood at 0.69% (Rs1,357 crore). Its individual and non individual non-performing assets (NPA) stood at 0.53% and 1.01% respectively.

For the quarter to end-March, HDFC said its stand alone net profit grew 11% to Rs1,723 crore from Rs1,555 crore while its total revenues, including interest income, grew 17% to Rs6,620 crore from Rs5,666 crore, same period last year.

As on 31 March 2014, the HDFC's total number of branches stood at 354.

HDFC declared a final dividend of Rs14 per share.

HDFC closed Tuesday 1.12% down at Rs877.25 on the BSE, while the 30-share Sensex ended the day flat at 22,508.

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