of bank employees released their names of these so-called defaulters . But the government took no action except providing budgetary funds to PSBs as “ recapitalization ”
The recent problem of NPA s of PSBs often came to be focused for the last five years . The Finance Minister of UPA government Chidambaram and then the Finance Minister of NDA government Arun Jaitley stated on record that the NPAs were due to the default by some 30 families . Nothing has happened to get back the money from the defaulter and the government even refused to disclose their names to the public .
Now the NPAs of PSBs are soaring with every passing year . They grew from Rs . 2.67 trillion on March 31 , 2015 to Rs . 6.89 trillion on June 30 , 2017 , according to the reply to Lok Sabha by Shiv Prasad Shukla , the Minister of State for Finance on April 6 , 2018 . Of the 21 PSBs 11 have NPAs greater than 15 per cent of total assets . The NPAs has further soared to Rs . 7.89 trillion by the end of December 2017 . The private banks ’ NPAs stand at Rs . 241.11 billion on June 2014 which grew to Rs . 989.33 billion by December 2017 . The total NPAs are Rs . 8.82 trillion . Remember that this figure is the balance after the government waived nearly Rs . 4 trillion accumulated NPAs during the last decade .
According to a report appeared in the Business Standard ( 1-6- 2018 ) 19 of 21 PSBs reported losses in 2017-18 which wiped out almost all the government ’ s capital injection of Rs 13 billion . The report accounts these losses to the acceleration of NPAs .
The first NPA list of RBI has 12 cases which would be dealt under Insolvency and Bankruptcy Code ( IBC ) consists of : Monnet Ispat and
July - 2018
Energy ; Electrosteel Steels ; Aloke Industries ; Jyothi Structures ; Bhushan Steel ; Bhushan Power & steel ; Essar Steel ; Jaypee Infratech ; Lanco Infratech ; ABG shipyard ; amtek Auto ; and Ev infrastructure .
Take the case of Lanco . It built Lanco Kondapalli Power first plant on duel fuel technology ( Mapth and Natural gas ). The Gas Authority of India ( GAIL ) refused to supply natural gas to Lanco kondapalli power first unit and even declined to commit for supplies in future as it had no surplus gas and the first unit run all these years on naphtha . Knowing this well , the banks financed three more units at the same site and after the completion of their construction they remained idle without producing power for more than 5 years . It is a well documented fact as was in the case of Enron project that the private power generating companies show double the cost of actual of construction in order to claim more price for the power they supply to state power utilities . The additional funds were siphoned off as the lending banks look the other way .
In the RBI list there are four steel industries . Tata competed to takeover Bhushan Steels offering highest bid . If approved , which is certain , it involves a “ haircut ” - meaning part of written-off loan by the lending bank – to the tune of Rs . 23,000 crore . This means that Tata is getting Bhushan steel cheaper at the expense of PSBs . This crisis leads further monopolisation in the industry . Already JSW is in the process of taking over Essar Steels .
This is how the Indian big bourgeoisie loots the PSBs and thrives on plundering the exchequer . For this reason , the CPI ( ML ) characterise the Indian big bourgeoisie as bureaucratic capitalist in nature apart from being a comprador one .
Privatisation is being placated as a panacea for the ills of banking sector . As noted earlier private banks accumulated NPAs and several of them failed ,. The failure of the Global Trust Bank some years back amply illustrates this . In 2008 most of the private banks are mired in NPAs . The latest example is Axis Bank , Which reported Rs . 2188 crore loss in the latest quarter . One of the oldest and largest private bank , ICICI Bank faced allegation of fraud and its CEO was removed from the post .
It is well known that term privatisation is an euphemism for handing over the Indian banks to foreign monopoly finance capital . A series of administrative and legal measures were taken during the last decade to pave the way for the takeover by the foreign finance capital . The Insolvency and Bankruptcy Code , Financial Reconstruction and Deposit Insurance Act , National Company Law Tribunal are some of these measures . These so-called reforms make it easy for the foreign finance capital to take over Indian banks and other financial institutions .
On the other side , these measures benef its Indian big bourgeoisie who caused the burden of NPAs . Under the IBC the banks were forced to forego 75 per cent of what is owed to them .
Mean while the peasants and small business and industries are harassed in the name of NPAs . The burden of the writing off and recapitalisation are placed on the backs of the masses who are already finding it difficult to meet the both ends meet . There is hope in the horizon as the economy has not yet recovered from the blows met by the devastating demonetisation and GST . Bank recapitalisation will further deteriorate the situation .
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