By Dr. Gyan Pathak
Number of bank fraud cases across India more than doubled in eight years, and about 12 lakh crore rupees were just vanished from the banking system. Indian Economy has been systematically fleeced, both through legal and illegal means, by big borrowers and bank officials. The Centre and the Reserve Bank of India do not take any blame for it, though they are found lacking in taking prompt action and helping even wilful defaulters by writing off bad loans.
From 4306 in 2013-14, the number of bank frauds rose to 9,103 in 2021-22. Reserve Bank of India (RBI) data released by the end of the year 2022 showed that the number of financial frauds were on the rise even in 2022-23. During the first six months of the current fiscal the number of financial frauds cases were 5,406 exceeding by 1100 compared to full year just before PM Narendra Modi have come to power in 2014. In the corresponding period of the last year the number of fraud cases were 4,069.
Union Ministry of Finance had informed the Parliament of India in last December that banks have written off Rs11.17 lakh crore bad loans from their books in the last six years till financial year 2021-22. The Ministry had said, “As per RBI data, public sector banks (PSBs) and scheduled commercial banks (SCBs) wrote off an aggregate amount of Rs 8,16,421 crore and Rs 11,17,883 crore respectively during the last six financial year.
In the written reply the Ministry has said that banks write off NPAs as part of their regular exercise to clean up their balance sheet, avail tax benefit and optimise capital, and the write-off is carried out by the banks in accordance with RBI guidelines and policy approved by their boards.
And the country is in the dark about the names of the defaulter persons whose bad loans were written off. It was said in the reply that with regard to the list of defaulters who defaulted more than Rs1 crore to the public sector banks, RBI has informed that borrower-wise information on written off loan accounts is not maintained by it.
It is a grim fact that has given rise to suspicion that big borrowers, officials, and politicians of the ruling political establishment are hand in glove in fleecing the public money from banks. It is further suspected that the Government resort to writing off bad loans of wilful defaulters to help its corporate friends and favourites.
However, in reply to another question, the Ministry had said that the RBI had informed that the total number of wilful defaulters each having outstanding loan of Rs25 lakh and above in public sector banks was 8,045 as on June 30, 2017 and 12,439 as on June 30,2022; whereas in private sector bank, it was 1616 as on June 30, 2017 and 2,447 as on June 30,2022.
The list of suit-filed against wilful defaulters of Rs25 lakh and above is available in public domain on the websites of the Credit Information Companies (CICs) and that of non-suit filed wilful defaulters is confidential in nature and are not in public domain, the Union Ministry of Finance had said in the reply.
Supreme Court of India is hearing a petition on bank frauds in which the petitioner Subramanian Swamy has alleged that RBI officials had acted in “demonstrable active connivance” in direct violation of statures, including the Reserve Bank of India Act. However, RBI has said in the Supreme Court recently that they have no role and individual banks are responsible for large-value loan sanctions, their post-sanction management and monitoring.
During the seven years from 2014-15 to 2020-21, bad loans of over Rs10.7 lakh crore of big borrowers/corporates were written off, and many of whom were wilful defaulters and not returning their loan amounts. The total amount written off was Rs 2,02,781 crore for the year 2020-21. An RTI reply by RBI in December 2021 had further revealed that a whopping Rs 11,68,095 crore worth of bad loans, or non-performing assets (NPAs), were written off in the last ten years with most of the write-offs coming in the last seven years.
Total write-offs in the last eight years are around Rs12 lakh crore and the chief beneficiaries are big corporate borrowers, who first take loans and they get them written-off.
Bad loans or non-performing assets (NPAs) in India in 2014 was 4.1 per cent that rose to 11.5 per cent in 2018. It was 5.97 per cent in the financial year ending March 2022 and 6.5 per cent in September 2022.
The internationally accepted norm is 1-2 per cent. An IMF 2021 report has said that NPA in US and the UK is just around 1 per cent, while in Canada0.4 per cent, South Korea 0.2 per cent and Switzerland 0.7 per cent.
The RBI’s Financial Stability Report of December 29, 2022 says we are not yet out of the woods. It has predicted that the gross NPA ratios of PSBs (public sector banks) may swell to 9.4% in September 2023. The gross NPA ratio may also “go up to 5.8% for private banks and to 4.1% for foreign banks”.
According to Rajya Sabha MP Jawahar Sircar the total NPAs of all scheduled commercial banks during the eight years between 2014-15 and 2021-22 was Rs 66.5 lakh crore, an estimate based on replies of Union Ministry of Finance in the parliament covering 7 years and 9 months and a projection for the last quarter of the financial year ending March 31, 2022. During this period written-off NPAs appears to be Rs14.5 lakh crore. Union Ministry of Finance replies indicate some 13 per cent of the amount could be recovered. Even if we assume 20 per cent recovery, the nation has lost close to Rs12 lakh crore forever, during the last eight years of Modi rule. (IPA Service)