51st Anniversary of Bank Nationalisation Has All Stakeholders Edgy and Unhappy, Time for Government To Rebuild Confidence
19th July marks the 51st anniversary of bank nationalisation. For decades there were mixed views on whether this was a smart move that led to explosive growth or a bad one, which only laid the ground for the loot of public funds through the neta-banker-businessmen nexus. 
 
This year though, an outpouring of anger and frustration of both customers and bankers marked the day, and both have valid reasons to be upset.  
 
While bank unions vociferously support bank nationalisation, the monumental loan write offs year after year, followed by periodic recapitalisation, shows relentless plunder of public money. Here are numbers put out by AIBEA (All India Bank Employees Association) in a press release to mark nationalisation. Moneylife has also written about how bank claims about continuing the recovery effort after the write-off is laughably hollow.  
 
 
The loan write-offs are invariably made good through unconscionable charges levied on customers, and the recapitalisation of banks by the exchequer—that is our money. Meanwhile real interest on bank deposits have turned negative and are below the inflation rate. And yet, since bank deposits represent the savings of the middle-class and the affluent, our political establishment does not care about their issues. 
 
What is worse, the bailout of public sector entities by the exchequer now extends to insurance companies as well. The union cabinet has just cleared a Rs12,450 crore bailout of three public sector general insurance companies. How long can the taxpayers of India bear the burden of dubious lending practices? 
 
Customers’ Distress
From the customer perspective, especially senior citizens, a fragile banking system leads to fears of institutional failure and the threat to their life savings, the bank deposits.  They are also concerned about a slew of ever increasing charges that are extracted for what used to be covered under routine banking services. Another issue is poor grievance redress, especially for victims of technology fraud (when they are not at fault) or mis-selling of bad financial products and insurance by bank relationship managers. 
 
These fears got exacerbated after Mr Shaktikanta Das’s speech on 11th July at a State Bank of India (SBI). Shocks to the financial system dubbed as ‘once in a lifetime events’ seem to be more frequent than even ‘once in a decade’, said the RBI governor, while also pointing out that the Covid pandemic “may result in higher non-performing assets and capital erosion of banks”. 
 
At the same conclave, he promised a ‘resolution’ of the fraud-hit Punjab and Maharashtra Cooperative Bank (PMC Bank) but said he needed “legislative backing to have some kind of a resolution corporation”. This suggests a revival of the Financial Sector Development and Regulation (Resolution) Bill, 2019, the details of which Moneylife had scooped in December 2019. The bill promises to eliminate a ‘systemic vacuum’ by creating a framework for resolution of financially distressed entities through a Resolution Authority (RA) and has yet to be introduced in parliament. 
 
The RA will indeed give RBI much needed flexibility, but until we see proof of significantly improved supervision (which the governor also promised), the spectre of institutional failure remains. Here again, the governor said that the new FSDR bill has eliminated the dreaded ‘bail-in’ provision that led to a nationwide furore in 2017 when a previous version of the bill was introduced in parliament. It was eventually withdrawn in August 2018. 
 
The governor is technically correct. Instead of an explicit ‘bail in’ provision, the new bill empowers the RA to “cancel or modify’ the failed institution’s liabilities barring those covered by deposit insurance. Although deposit insurance cover has been increased to Rs five lakhs (up from Rs one lakh), this will remain a matter of concern for savers, especially senior citizens who live on interest earned on term deposits. 
 
The governor has promised better supervision based on market intelligence and he is personally very open to feedback. But RBI as an organisation has a pathetic record and has repeatedly been too arrogant to heed even explicit warnings by whistle-blowers. Until RBI can demonstrate its ability to ‘smell the distress’ and “initiate pre-emptive actions”, depositors have to be alert, prudent and spread the risk through multiple bank accounts, which has its own risks.
 
Depositors and borrowers are both distressed about the quality of service at banks and complain about lack of cooperation and empathy during the lockdown. But a look at the other side provides a different perspective. 
 
Bankers’ Burden
 
 
A bank is only as good and safe as the bankers who work for it. The biggest and safest segment of Indian banking continues to be public sector banks (PSBs) -- mainly because of the implied guarantee about our money. But their employees are among the most ignored, angry and miserable lot today.
 
Their concerns, as well as those of private sector bankers, are both urgent and valid, but barring one instance, their pleas on social media and through multiple letters from leading bank unions have not even been acknowledged. Here are some issues that need to be addressed if the government wants bank officials to play a role in the revival of the economy. 
 
Death, Safety and Violence:  Banks have been declared an essential service and have remained open through most of the Covid lockdown but are working with a heavily curtailed staff strength. This entails facing the risk of infection on their way to work, at work from co-workers and customers and worse facing the wrath of angry depositors when things are delayed. Data collated by a group of bankers indicates that at least 58 bankers have succumbed to Covid so far and over 1000 are infected. And yet, they are being forced to fight for basic rights. 
 
 
Bankers allege that they are forced to work without proper precaution or sanitisation, even after colleagues tests positive for Covid; they also claim that in most cases, there is no staff rotation policy for front office staff at branches, although they are most at risk. 
 
 
Bankers have uploaded photos and videos of attacks and intimidation by customers or local politicians. The only time when finance minister Nirmala Sitharaman intervened was after a furore on social media when a lady banker was badly injured after being attacked by a constable in Surat. Even in that case, there are no serious charges against the constable despite a complete video recording of the incident. In most other cases, bank officials become targets of customers’ frustration when they have no control over policies, decisions or even infrastructure. 
 
Medical Insurance: With so many bankers getting infected almost on a daily basis, medical insurance has become a seriously issue. Insurance cover for all PSBs (barring SBI) is part of the wage agreement negotiated by unions with the Indian Banks Association (IBA). But bankers claim that this does not cover the large amounts charged by hospitals for treating Covid and for all the important exclusions. 
 
This is borne out by a letter to RBI and the finance ministry by Mr Soumya Datta, General Secretary of the All Indian Bank Officers Confederation (AIBOC) on 6th June 2020.  He cites the example of a banker (from Indian Overseas Bank), who was charged Rs4.77 lakh by the hospital, but the insurer only reimbursed Rs1.85 lakhs, while the distressed officer had to find the means to pay Rs2.91 lakhs herself. 
 
Stunningly, as much as Rs2.5 lakhs disallowed was on account of the PPE kit used by healthcare workers. If bankers are forced to attend office as part of essential services and to work without adequate protection, it is stunning that they are forced to fight for full reimbursement of medical expenses when infected. 
 
The AIBEA says that insurance is part of the group insurance policy, which is part of the wage negotiation. Although there are caps for various employee grades, there is also a corporate buffer of Rs100 crore across bankers. This may have been okay in normal times, but bankers point out that it is inadequate during an unprecedented pandemic, especially when they are forced to attend office despite risks and hospitals are billing heavily for things that are not covered by insurers. 
 
Compensation on Death: Bankers believe they ought to be treated on par with health care workers, police and other essential services employees who have been assured of Rs50 lakh compensation in case of death due to Covid. At present, the life insurance cover for bankers is Rs20 lakhs, which many say is grossly inadequate, especially when Bank of Baroda has provided “an additional ex-gratia payment of Rs30 lakhs” taking the total compensation to Rs50 lakhs. A union leader tells me that even when the compensation is lower, it is coupled with compassionate appointment for kin, which many find more beneficial. 
 
These are issues that can be easily addressed and resolved through dialogue but have been allowed to fester at a time when the system depends on bankers. Isn’t it time for the finance minister and the RBI governor to engage more actively with the bankers? It will benefit all stakeholders. 
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    COMMENTS

    bala.shanbhag

    2 weeks ago

    I am a retired Banker. Yesterday, I had through whatsapp message commmunicated that the Bank Officials who are affiliatad to Unions, who are one of the Board of Diectros are responsible for NPA of loan accounts. Hence, there is no meaning in blaming Bank Management. I was a Zonal Chairman of Mumbai Unit of a Nationalised Bank.
    I observed, Workmen/Officers' Directors come to Board Meeting, enjoy and leave without no responsiblity and crying foul in Public. It is a tragedy.

    Though there are many Directors on Board, more details are available with the Employees and they have ample time to vet the proposal. Further, Bank Employees ( Officers ) are first stake holders of their Institution. Why they can not protect the interest of Bank. Where is their accountability to 'food giver' ?

    Privately coaliation, publicly collission ! A big drama

    REPLY

    vinoda

    In Reply to bala.shanbhag 2 weeks ago

    Respectfully appreciate your opinion and perspective. Restores confidence. Welcome.

    Meenal Mamdani

    3 weeks ago

    Excellent article as one has come to expect from Ms Dalal.

    I would like to bring up one more point.

    Indians have the habit of complaining loudly but will not lift a finger to bring about change. They expect some one else to do the heavy lifting while they sit on the sidelines mouthing wisecracks.

    How many of the responses to the many articles in this newsletter offer any ideas about how to bring about change? Not even one. Many of the readers are reasonably well off, educated, have held important positions in private or public spheres, possibly retired with lots of time on their hands. They could hold a meeting of like minded people and see how they can put pressure on their bank managers to get answers to their questions.

    No effort for change is painless and none are guaranteed success but it is worth trying. Now with Zoom even those of us who cannot be present physically may be able to participate.

    Come on fellow Indians. Start a movement. This is the perfect time to put your anger to good use.

    miabb7816

    3 weeks ago

    very relevant post though a section of media and politicians are clamouring for Privatisation of PSBs even after witnessing series of Private Banks failures and debacles and appearance of Public Sector Banks as white night...recent example of collapse of Yes Bank and Corrupt board and MD CEO Mr Rana Kapoor...However,it would have been much more appropriate to have the figure of so called efficient Private Banks figure of Write off during last decade....and share of Private Banks in financing top 12 NPLs which is 25% of the total bad loan in entire banking system...It is better to accept non availability of level playing field with Private banks and dreaded Politicians-Banker- Babu relationship in the functioning and management of Public Sector Banks....Ultimately in all ocassions the common Employees and customers at the receiving end....

    ramaninv1953

    3 weeks ago

    Well written article.

    hamungel

    3 weeks ago

    Well balanced article.

    yerramr

    3 weeks ago

    One can sympathize with the Bank staff under the circumstances narrated. If the customers are revolting, it is because the bank staff just don't care for them. They are caring more for the machine in front of them. Customers have become unsure of their bank balances. They don't get response to their letters. The machine response is structured. The capacha never works. The tired customer on the net leaves cursing his fate. Controlling Authorities also stopped responding to the customers the same way.
    Bad banking led to the bulging NPA book. This bad banking involved lending without due diligence; trusting the Balance Sheet more than entrepreneur; not inquiring the antecedents of the partners/directors of the Board before lending and not monitoring the account as required. Unsupervised and non-monitored credit is the reason behind the NPAs. They try to show evidence for monitoring through debit of inspection charges or charges for non-compliance of a client without visiting or discussing with the enterprises. The saga has to end somewhere and the Banks need a thorough clean up. Nationalization Day has lost its relevance because the financial inclusion still remains an unfinished agenda, with banks worried more about profits and capital than responsible social banking. Banks have to get back to banking, leaving off the universal banking tag.

    kvrao42004

    3 weeks ago

    14 banks were nationalised on 19th July 1969(Saturday) and not on 10th July, 1969as mentioned in the feature. A good write up.

    ganesanjaicare

    3 weeks ago

    you have mentioned problem for the bankers.what about common citizens because of the complete lockdown no income for those not having ration card or not eligible any subsidy and not benifited through direct benefit transfer.because of non transportation of mumbai local and not allowed to go out are suffering .they have to pay mobile eb wifi milk and groceries and rent and school fees.i request moneylife to takeup this issue and thre govt can arrange loan with 1 percent above reverse repo rate through aadhar number.Those people donot know whom to approach .they are not having proper emergency savings fund.

    REPLY

    vinod_khatanhar

    In Reply to ganesanjaicare 3 weeks ago

    Very True.

    vinoda

    3 weeks ago

    Bankers at bank Nationalisation have rather taken three monkeys of Mahatma Gandhi depicting moral gestures —- see no evil, speak no evil, and hear no evil which was a gift from a Japanese monk named Nishidatsu Fuji. It would be a good gesture and natural justice on the part of AIBEA if they had also come out with the figures of Interest earned from the period in table from 2001 to 2019. My opinion - India needs a Monitor and Regulator /Ombudsman to analyze all recovery proceedings leading to Auction Sale of Immovable Assets.


    State Bank Lends Rs1,200 Crore to Patanjali to buy Ruchi Soya, Despite Zero recovery and Rs746 Crore Write Off
    Updated on 22 July 2020 at 7.15pm to add response from SBI.
     
    State Bank of India (SBI) response to a shareholder have unveiled strange banking practices which suggest a callous disregard for recovering bad debts. The beleaguered Ruchi Soya Industries, whose share prices are rampaging today is a prime example. 
     
    In FY2019-20, SBI wrote off Rs746 crore of non-performing assets (NPA) of Ruchi Soya Industries and has not recovered a single rupee from the company. The plan approved under the Insolvency & Bankruptcy Code (IBC) had indicated that SBI would recover Rs883 crore against its admitted claim of Rs1,816 crore. Instead, it made a fresh loan of Rs Rs1,200 crore to Baba Ramdev-led Patanjali Ayurved to help it acquire the company. 
     
    SBI was part of a consortium of banks that lent Rs3,200 crore to Patanjali Ayurved for its acquisition.  In fact, several banks led by SBI had made claims of over Rs12,146 crore against Ruchi Soya before the bankruptcy courts. SBI had the highest exposure of Rs1,800 crore, followed by Central Bank of India (Rs 816 crore), PNB (Rs 743 crore), Standard Chartered Bank India (Rs 608 crore) and DBS (Rs 243 crore). It would probably be safe to surmise that other public sector banks (PSBs) in the consortium have made similar write-offs.
     
    The question is, why are public sector banks (PSBs) not smart enough to protect their interest by building in some upside while lending to the new borrower, who is expected to achieve a turnaround? Many private banks insist on converting loan to equity in such situations and gain from capital appreciation. In the case of Ruchi Soya, the share price has moved from about Rs3.50 to Rs1,535 a gain of 43,757.14% since Patanjali acquired the company.  
     
    Documents shared by SBI to Vivek Velankar, president of Pune-based Sajag Nagrik Manch, and a shareholder of the bank, reveals that there is absolutely no recovery from Ruchi Soya till March 2020. 
     
     
    Technically speaking, when debts are written off, they are removed as assets from the balance sheet because the bank does not expect to recover payment. This practice is frowned upon by experts but is routinely done by banks as part of their tax management clean-up process. The beneficiaries are invariably some of our biggest industrialist defaulters. 
     
     
    In a regulatory filing in September 2019, Ruchi Soya had said that the National Company Law Tribunal (NCLT) has approved Patanjali's resolution plan of Rs4,350 crore. The order had stated that, Patanjali would “infuse the amount of Rs4,350 crore” in a SPV (special purpose vehicle) called Patanjali Consortium Adhigrah, which will be later amalgamated with Ruchi Soya. 
     
    In an exchange filing, Ruchi Soya said the Patanjali group would infuse Rs204.75 crore as equity and Rs3,233.36 crore as debt. Another Rs900 crore will be brought through the subscription to non-convertible debentures and preference shares in the SPV. It would also provide a credit guarantee of nearly Rs11.89 crore.
     
    In a reply to an application filed under Right to Information (RTI) Act, the Reserve Bank of India (RBI) had told applicant Saket Gokhale that Ruchi Soya Industries with a debt of Rs2,212 is one of the top 50 defaulters.
     
    Patanjali Ayurved was supposed to have paid back Rs4,053.19 crore creditors under the resolution plan. So, either Patanjali Ayurved has repaid part money to creditors or renewed old loans of Ruchi Soya in its account books.
     
    As Moneylife had mentioned, during the eight years from FY12-13 to FY19-20, SBI has 'technically/ prudentially written off’ a massive sum of Rs1.23 lakh crore from its books, but manged to recover only 7% or Rs8,969 crore in this period. This makes a mockery of the aggressive claims by a string of high-profile government spokesperson and economic advisors that a ‘technical’ write-off does not stop the recovery process. A former chairman of a PSB told Moneylife as a matter of fact that once a loan turns bad in India, it is almost impossible to recover anything because it has already been ever-greened for several years. (Read: SBI Writes Off Rs1.23 Lakh Crore of Bad Debt, Recovers Paltry Rs8,969 Crore in 8 Years! )
     
    When Patanjali completed the acquisition, Ruchi Soya shares were hovering at around Rs3.50 per share on the BSE. Earlier on 24 July 2019, it hit its 52-week low of Rs3.28. From January this year, Ruchi Soya share price started moving up. In fact, on 18 May 2020, it hit a new high of Rs701.25, but slumped till 28th May 2020. After that it started reaching new highs and on 29 June 2020 recorded its 52-week high of Rs1535 per share on the BSE. 
     
     
    On Thursday, Ruchi Soya closed 5% down at Rs898.15, while the 30-share Sensex ended the day 1.2% higher at 36,471.  
     
    We emailed SBI asking for its clarification on the debt write off and recovery from Ruchi Soya or the company's new owners. We have asked...
    1. What attempts SBI made to recover its written off loan of Rs700 crore from Ruchi Soya?
    2. What efforts SBI had taken to recover the loan amount from Ruchi Soya through the NCLT proceedings?
    3. Since Patanjali Ayurveda took over Ruchi Soya, who owns the responsibility of the Rs700 crore debt given by SBI to Ruchi Soya?
    4. How SBI plans to recover its written off debt of Rs700 crore and from whom the amount would be recovered?
     
    UPDATE:
    However, SBI declined to comment on any of these questions. In an email, a spokesperson from SBI says, "It is the policy of the bank not to comment upon individual account and its treatment".
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    COMMENTS

    bala.shanbhag

    2 weeks ago

    I feel, there should be responsiblity while commenting. Ruchi Soya, there is recovery,
    I understand.

    beckhem18

    2 weeks ago

    Public banks are free money scheme for some political thugs. Baba's fund management is from next level.

    tillan2k

    2 weeks ago

    We have become land of sadhu thugs

    monish211

    3 weeks ago

    Another scam in the making. Sponsored by the ruling party. Its a shame.

    REPLY

    bala.shanbhag

    In Reply to monish211 2 weeks ago

    I understand, there is recovery in Ruchi Soya. Tell the correspondent to confirm.

    MDT

    In Reply to bala.shanbhag 2 weeks ago

    Thanks for your comment, Sir. This article is written based on information as shared by SBI with a shareholder. If SBI itself states there is no recovery (till March 2020), we need to accept it. In addition, we have sent emails to SBI top executives, but have not heard from them on this subject of written off debt of Ruchi Soya and recovery. Any idea, why SBI is keeping mum on this?

    Jose Koshy

    3 weeks ago

    Absolute Ponzi Scheme..Legally use NCLT to clean all Sins and ever green using the same Banks....Wah Kya Idea hai...All Paid by Tax Payers sweat ! Atmanirbhar ! Indeed

    hamungel

    3 weeks ago

    It was very simple to ask for equity for the written off Rs.746 crores. Why was this not done is perplexing.

    jvp0101

    3 weeks ago

    This thief is Feku’s benami partner.

    guptha2001

    3 weeks ago

    SBI has written off the debt from the Books, it has not waived off the debt. Unit is running and recovery is happening. Moneylife may need to better phrase the sentences. Thanks

    REPLY

    beckhem18

    In Reply to guptha2001 2 weeks ago

    How much recovered since last 8 years. At this rate govt will take next 50 Years to recover till last paisa.

    bala.shanbhag

    In Reply to beckhem18 2 weeks ago

    Sir, all loans are not covered by the securiteis. Hardly, there will be full recovery. It is the very nature of any loan. Even if one gives to one's friend! Banks give loan on loan documents, not fully secured as per the guidelines, like Housing loan. There may be about 5% NPA in any debts/loans. However, between 2004 to 2014 it crossed 12% due to reckless lending, where banks land in trouble.

    jvp0101

    In Reply to guptha2001 3 weeks ago

    Gupathaji, please stop lying like Feku Chaiwala. The readers are not cowdung eaters like Andha bhakts. Ha ha has.

    prime

    In Reply to guptha2001 3 weeks ago

    Ok, then if recovery is happening then why write off the debt?

    muditsrivstv

    In Reply to prime 3 weeks ago

    Loan write off doesn't mean that the bank will cease it's efforts to recover the funds. The article itself explains the meaning of write off an account.

    in4tunio

    3 weeks ago

    Another question about Ruchi Soya: how was equity reduction in the ratio 100:1 allowed without repricing the stock?

    yerramr

    3 weeks ago

    This is a classic case of behest lending and irresponsible too. When we request for helping revival of viable MSMEs in the State, it refuses to move despite Subordinate Debt offering by GoI in its Atma Nirbhar Bharat Abhiyan package for stressed assets. Even if they cherry pick the MSMEs for revival, with Rs.1200cr at least 10000 manufacturing micro and small enterprises can be revived!!

    s5rwav

    3 weeks ago

    Mr Shaktikanta Das the Incumbent Governor of RBI is Publicly Requested to Recover Lost Public Money from the Board of Directors of State Bank of India Headed by Mr RajnishKumar. I am Babubhai Vaghela from Ahmedabad on Whatsapp Number 9409475783. I am also Shareholder of State Bank of India. Thanks.

    harinishanth

    3 weeks ago

    1.2 lakh crore from 1 bank. If collectively all bank put together......so much of taxpayers money is wasted.. We would be a trillion dollar economy long before had there been strong governance. Can Modiji do anything to protect his people?

    REPLY

    kalpakjoshi666

    In Reply to harinishanth 3 weeks ago

    Simple answer, haha NO.
    He might have done something probably initially, if he was so careful for the concerned matter.

    veera.kumar1960

    In Reply to harinishanth 3 weeks ago

    Modi government has to set right this trend otherwise private business houses will plunder more and more tax payers money and this country will be bankrupt like our terrorist neighbors Pakistan.

    prime

    In Reply to veera.kumar1960 3 weeks ago

    The rot is not just private borrowers. It is as much the elected representatives, and then the bank employees.

    bala.mathur

    3 weeks ago

    Why am I not surprised? Because it has happened so many times before. And it will continue to happen. That, my friends, is Vikas..

    sudhanva

    3 weeks ago

    Take a deep breath and relax.

    REPLY

    vkparam29

    In Reply to sudhanva 3 weeks ago

    Baba is new poster boy of present regime. He will get finance for dead horse also. No wonder. Take deep breath and relax

    kumarindiacool

    In Reply to vkparam29 3 weeks ago

    true

    SBI Writes Off Rs1.23 Lakh Crore of Bad Debt, Recovers Paltry Rs8,969 Crore in 8 Years!
    While the banking regulator and the Union government have been busy clarifying that bad loans written off does not mean a waiver, documents procured by Vivek Velankar from State Bank of India (SBI) reveal minuscule recovery of these bad debts. Information received by Mr Velankar shows that as against a write off of Rs1,23,432 crore, SBI has recovered just over 7% or Rs8,969 crore over the past eight financial years.
     
    Mr Velankar, president of Pune-based Sajag Nagrik Manch, says, "I tried obtaining this information under Right to Information (RTI) Act, but SBI denied it claiming that collating this information would be a waste of its resources. Being a shareholder of SBI, I then asked for this information as question for the annual general meeting (AGM). I did not get a chance to ask my question during the AGM, but the bank shared this information, which is quite shocking. This also exposes how the bank writes off loans of 100s of crores of rupees of large defaulters while denying waiver of simple interest on loans for common customers."
     
    The Bank’s reply to Mr Velankar shows that during the eight years from FY12-13 to FY19-20, SBI has 'technically/prudentially written off’ a massive sum of Rs1.23 lakh crore from its books, but manged to recover only 7% or Rs8,969 crore in this period. This makes a mockery of the aggressive claims by a string of high profile government spokesperson and economic advisors that a ‘technical’ write-off does not stop the recovery process. The fact is that once a loan turns bad in India, it is almost impossible to recover anything because it has already been ever-greened for several years, said a former bank chairman to Moneylife.
     
    (Source: SBI)
     
    Technically speaking, when debts are written off, they are removed as assets from the balance sheet because the bank does not expect to recover payment. This practice is frowned upon by experts but is routinely done by banks as part of their tax management clean up process. The beneficiaries are invariably some of our biggest industrialist defaulters. 
     
    In contrast, when a bad debt is written down, some of the bad debt value remains as an asset because the bank expects to recover it. However, as SBI has shown, most of the times, there is no recovery or negligible recovery for the amounts written off. 
     
    As per the data provided by SBI to Mr Velankar, Bhushan Power & Steel Ltd, IRVCL Ltd and Videocon Industries Ltd are its biggest defaulters, and had not re-paid a single penny. Alok Industries Ltd is the biggest borrower in this list with a written off loan of Rs8,098.05 but has repaid Rs1,703.57 crore to SBI. 
     
    Here is the list of loan portfolios worth Rs500 crore and above that were written off by SBI.
     
     
    Earlier in April, the Reserve Bank of India (RBI) had said that Indian banks have technically written off a staggering amount of Rs68,607 crore due from 50 top wilful defaulters, including absconding diamantaire Mehul Choksi. RBI had revealed this information in reply to an RTI filed by Saket Gokhale.
     
    RBI said that this amount (Rs68,607 crore) comprising outstanding and the amounts technically or prudentially written off till 30 September 2019. 
     
    Topping that list of top-50 defaulters to Indian banks, was Mr Choksi's scam-hit company, Gitanjali Gems Ltd, which owed Rs5,492 crore, besides other group companies, Gili India Ltd and Nakshatra Brands Ltd, which had taken loans of Rs1,447 crore and Rs1,109 crore, respectively.
     
    Mr Choksi is currently a citizen of Antigua & Barbados Isles, while his nephew and another absconder diamond trader Nirav Modi is in London.
     
    The second in the list is REI Agro Ltd, with an amount of Rs4,314 crore, and its directors Sandip Jhujhunwala and Sanjay Jhunjhunwala who are already under the scanner of the Enforcement Directorate (ED) since over a year.
     
    The next on the list in the Rs4,000-crore bracket is absconding diamantaire Jatin Mehta's Winsome Diamonds & Jewellery owing Rs4,076 crore and which is being probed by the Central Bureau of Investigation for various bank frands.
     
    In the Rs2,000-crore category, there is the Kanpur-based writing instruments giant, Rotomac Global Pvt Ltd, part of the famed Kothari group, which owed Rs2,850 crore.
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    COMMENTS

    gopaliyer1950

    2 weeks ago

    1.On SBI recovery rate , only redeeming feature is that last 2 years. recovery rate is around 10 %. 2 .It is a fact that banks efforlessly write off large lians, but would not waive even interest for genuine small borrowers. 3.List of defaulters include Reliance communications.I suppose part of Ambani group !

    bala.shanbhag

    2 weeks ago

    Sir, it does not mean amount is 'written off' and borrower need not pay ! As per the Prudential Norms, Provision is made for these amount out of the profit of the Bank. These cases are either under court, or under recovery process. If the provision is not made as per 'norms', Bank is simply showing higher NPA on the asset side and reserve on liability side. Higher percentage of NPA gives wrong picture of the Bank. Hence, it can not be construed as 'Written off', or borrowers need not pay !Eg. In case of Nirav Modi, Vijay Mallaya's cases, banker can not simply show NPA till recovery will make prudential write off, as recovery takes time. It does not mean, they are let off. New lawas like : Fugative Offenders Act... etc.. take time to adjust the amount even if the amount is recovered. Which may please be noted.

    tillan2k

    2 weeks ago

    ahhahaah SBI Sickening Bank of India

    mohd_aslam_ansari

    2 weeks ago

    I wonder why the properties/assets of defaulters are not being attached. Include properties of the concerned bank officials too for recovery. What about the guarantees or mortgages provided for obtaining such huge loans? And how these entities are still running their businesses?

    REPLY

    tillan2k

    In Reply to mohd_aslam_ansari 2 weeks ago

    They have partners and patrons at high places

    ramchandra.karve

    2 weeks ago

    The Willful Loan Defaulters such as Mallya, Nirav Modi, Mehul Choksi and others deserve to be stripped at Public Places and flogged all over their bodies with Red Hot Iron Rods. They should not be extended Public Health Facilities, supply of electricity and water to their premises should be discontinued by the Government . Ramchandra Karve

    jjain782

    3 weeks ago

    I understand nobody can touch cheats Nexus between criminals and bank officials has to be broken Crime can be committed only with the help of bank officers, they must be punished first
    There should be at least 100 Sucheta Dalalas to wake up the authorities all the best

    umeshs62

    3 weeks ago

    Cheating is in our blood. It has become part of our culture. PSU officials are hand in glove with scamsters. Give a loan of few hundred crores to a scamster, take a cut of few crores and you are set for life. Scamster needs courage to grease a few palms, borrow and disappear. If he is dragged to court then the same process will be followed.

    REPLY

    rs235m

    In Reply to umeshs62 3 weeks ago

    Court case will go on for 10 years and many officials will be transferred or will retire on this time.Only few unlucky scamsters like L P yadav go to jail.That too government does not recover the scam money.

    tillan2k

    3 weeks ago

    If it was not owned by GOI and bankrolled by tax payers SBI long ago would have become SICK Bank of India

    prime

    3 weeks ago

    SBI's market carp is 1.67 lakh crore. So this writeoff is about 75% of its market capitalization. Any other company would have gone bankrupt long back. But we still plod along with SBI and PSU banks instead of putting the bankers and defaulters in jail.

    Let's remember that for every Singal, Jivrajka, Dhoot, Choksi, Modi, Jhunjunwala, Mehta, there is at least one politician and 5 bankers guilty.

    hamungel

    3 weeks ago

    Surprising to see Ruchi Soya's Rs.746 crore write off. Why couldn't SBI get shares worth this amount?

    rs235m

    3 weeks ago

    Is SBI a Dharamsala for giving donations to rich people by robbing the middle class taxpayer and also senior citizens who solely survive on the bank interest. Part of the written of amount might have gone to political parties ,Babus , bank executives who are in connivance with suit boot industrialists.It is a joint" loot and share "program.

    mahesh.bhatt

    3 weeks ago

    Welcome to Babugiri Liberalised India Aam Aadmi banking services charged in pennies 1 Re pens tied downs 7% loan recoveries done all automated processes Manager's undercuts above in all transactions of loan approvals Global mess in India Royally RBI dossiers? Mahesh Bhatt

    ganeshchopade09

    3 weeks ago

    7 Lakh Crore Bad Loans Written Off In Decade, 80% Of It In Last 5 Yrs ( This doesn't include FY2020 Figure). In last 8 year country's largest lender SBI manage to recover mere 8969 Crore against 1.23 Lakh crore written off!!

    mywopy

    3 weeks ago

    That sum what got wasted away at SBI is more than 3% of our nations annual budget.

    Like someone addressed these psu bankers a while ago, a group of heartless bankers.

    They should be asked to quit their jobs in shame for failing the trust of this great nation and its people.

    REPLY

    richard

    In Reply to mywopy 3 weeks ago

    Thanks for your comment. It had a deep insight with the reasons for the NPA. There is also another serious one and that is corruption with the connivance of the Bankers. They granted these loans by taking kickbacks.

    dn.prakash

    3 weeks ago

    Before reforms came in 1991, Banks were taking collateral securities/personal guarantee of Directors. After the reforms, along with economic growth, demand for credit was huge and competition among banks started leading to agressive lending. The Banks also started marketing of products(at the advise of consulting firms). Credit Department were given huge targets leading to the top executives chasing the corporate borrowers so that targets are met faster. Banks forgot secuirty and guarantee aspects in their greed for business. Crony capitalists found this opportunity and took in principle sanction from one lead bank and showing that letter they started bargaining with other banks. Top executives who want to reach targets became guinea pigs for these corporates. Somewhere during 2001-2008, RBI permitted Corporates to borrow short term loans (less than a year) beyond the consortium in the name of excess liquidity in the system. This helped these corporates to avail short term loans to pay overdues and keep the account out of NPA at the cost of Banks themselves. It went to such an extent, Banks have lent against brand value (imaginary sums) and all today's major defaulters got benefit of this. Today when the music stopped, banks are holding assets in books which have hardly any value. No surprise banks recovering only 10% to 20% of loans.

    REPLY

    richard

    In Reply to dn.prakash 3 weeks ago

    Thanks for your comment. It had a deep insight with the reasons for the NPA. There is also another serious one and that is corruption with the connivance of the Bankers. They granted these loans by taking kickbacks.

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