The government has asked public sector banks that are reeling under bad loans to focus on recovery from other defaulters also before the situation goes out of control.
While Vijay Mallya, the defamed promoter of the now defunct Kingfisher Airlines (KFA), owes more than Rs 7,000 crore to the banks, the total worth of wilful default cases with Indian banks is over Rs 55,000 crore, with public sector banks accounting for almost 80% of the value.
Gross non-performing assets (NPA) of public sector banks – loans that have turned unproductive-- increased from 5.43% as on March 2015 to 7.30% as on December 2015.
In terms of value, gross NPA of the state-owned banks increased from Rs 2,67,065 lakh crore in March 2015 to Rs 3,61,731 lakh crore in December 2015 – an increase of Rs 94,666 crore over the nine months 2015-16. Wilful default cases account for 13% of these non-performing assets.
Sources said that the Indian Banks’ Association (IBA) has taken up the issue.
“The focus is only on Kingfisher but the other cases need to be handled too and the banks are going slow on that,” said an official source.
According to the All India Bank Employees’ Association, the list of defaulters also includes Winsome Diamond and Jewellery, Forever Precious Jewellery and Diamonds, Zoom Developers.
The Central Vigilance Commission (CVC) and the Central Bureau of Investigation (CBI) have also pointed out that when loans are restructured, banks do not take appropriate steps to ensure that the additional loan is being utilized well and is not diverted by the promoter.
Meanwhile, on Saturday, market regulator Securities and Exchange Board of India (SEBI) decided to bar wilful defaulters from being appointed to the boards of companies. The regulator has already barred them from raising funds from the market through stocks and bonds.
The CVC has also pointed out that when loans turn unproductive there is no procedure to identify the assets pledged and assets of the guarantors, and no proactive steps are taken to secure those assets.