IDBI Bank Ltd, which has received multiple bailouts in the past few years, recovered just 7% from big defaulters who have an outstanding of Rs100 crore and more, from Rs45,536 crore bad loans it wrote off since financial year (FY)2016-17. What is more shocking is IDBI Bank took a haircut of 60% while settling loans worth Rs15,623 crore through the national company law tribunal (NCLT), reveals a reply received under the Right to Information (RTI) Act. IDBI Bank was re-categorised as a private sector lender in January 2019 after the Life Insurance Corporation of India (LIC) increased its stake to 51% in the lender.
Interestingly, unlike other public sector banks (PSBs), who make all efforts to keep hidden the names of big defaulters, IDBI Bank publishes the list on its website. According to the list, the top-3 big wilful defaulters of IDBI Bank are: ABG Shipyard Ltd (Rs2,057.06 crore), Amtek Auto Ltd (Rs1,815.91 crore) and Punj Lloyd Ltd (Rs1,106.85 crore).
According to information received under RTI by social activist Vivek Velankar, during the past six financial years (up to FY22-23), IDBI Bank wrote off bad debts worth Rs45,536 crore belonging to big defaulters. However, it could recover just 7% or Rs3,271 crore.
During the same period, IDBI Bank wrote off bad loans worth Rs13,274 crore of wilful defaulters and managed to recover just 6% or Rs838 crore. For defaulters with an outstanding of Rs1 crore and less, the written-off debt during the past six years is just Rs314 crore, information received by Mr Velankar shows.
In his application under RTI, Mr Velankar, who is also the president of the Pune-based Sajag Nagrik Manch, also asked for the list of borrowers whose loans were settled through NCLT or similar forums and IDBI Bank accepted a haricut for settling the loan accounts. However, IDBI Bank denied this information stating that "the list of borrowers whose loans were settled through NCLT is in the nature of commercial confidence and relates to personal information. Hence the same is exempted from disclosure under Section 8(1)(d) and 8(l)(j) of the RTI Act. Further there is no larger public interest that warrants disclosure of such information under the RTI Act."
"When a common borrower defaults, Bank publish(es) his name and all the details through advertisements in newspapers. Why then are the names of bigger defaulters protected? Why don't the 'commercial confidence' and 'personal information' clauses apply while publicising the names of the common borrowers?" Mr Velankar asks.
However, IDBI Bank shared information about the loan amount and haircut (based on the principal amount and cash recovery) in the settlement of loans through NCLT from FY17-18 to FY22-23. As per the information, IDBI Bank's principal amount in these settled loan cases was worth Rs15,623 crore and it took a haircut of about 60% or Rs9,258.51 crore.
From FY17-18 to FY22-23, IDBI Bank says its GPO waiver, as of the cut-off date in respect of settlement cases, was worth Rs8,026.87 crore.
According to Mr Velankar, the writing off of bad loans shows that banks are reluctant to follow the rules and laws passed by the Union government to recover loan amounts from big borrowers. In fact, he says, "Banks are more interested in writing off loans of these big defaulters so as to show a smaller amount under NPAs and maybe there is a nexus among bankers and these defaulters resulting in banks not showing much interest in recovering written-off debt."
"Also, since these written-off loans are not part of the balance sheet, nobody even looks at them. Since this method of writing off loans is being rampantly used by banks, the finance ministry and the Reserve Bank of India (RBI) need to take strong action against banks indulging in such practices," he added.