Sie sind auf Seite 1von 10

The Great Indian Bank day light Robbery: Rs.2.27 trillion.

i.e. Rs.2270,000,00000
chor machaye chor !
About 11 years ago, Indian Express ran a series of articles under title The Great Indian
Bank Robbery chor machaye chor !on the systematic loot of the banking system with
possible connivance of Bank Officials estimated at Rs.1.1 lakh Crore. Today the media
is going crazy over NPAs of willful defaulters. These things have happened in the
past also and conveniently forgotten. This happens as either people loose interest or gets
appropriated into the system by the very people who are targeted by such reports.
Whatever it may be, the point is kicking up such storms is just a hobby and a way to get
into limelight with ulterior motives. Even Indian Express did not follow it up. Now the
government /media is breast beating about black money stashed away in foreign banks.
It is only such ill gotten wealth which is carted away. Whatever it may be, the point is
kicking up such storms is just a hobby and a way to get into limelight with ulterior
motive. When the parliament passed the a new law to act SARFESI against India Incs
mountain of unpaid loans the Indian express after thorough investigations ran series of
five articles titled Rs 11,00,00,00,00,000.
This is the money that India Inc owes and won't pay back. Here's what it could pay for:
all our defence bills for 2 yrs. Or an expressway in every state. Or A school in every
The report said Forgotten Harshad Mehta? Just as well. The scale of the scandal now
threatening India's economy is vastly greater than the 1994 stock market carnage. The
numbers may seem unreal, but Rs 110,000 crore is actually a conservative government
estimate of the unpaid loansofficially called non-performing assets (NPAs)staining
the books of India's banks and financial institutions.
For vast swathes of corporate India, it's been an era of financial plunder. Then why
Finance Minister Jaswant Singh called NPAs ''loot, and not debt.
The articled underscored the truth that The lenders should first target the largest
defaulters, who have the ability to pay but have shown no willingness to do so, said
then UTI Chairman M. Damodaran. The Finance Minister has assured Parliament that the
new law will be enforced without fear or favour. The message may not have reached
some of his colleagues in Parliament.
FM & EX-FMS: ALL AGREED (This is) loot, not debt...

The provisions of the Act will be enforced without fear or favour. Well start with the
bigger NPAs, and then move to the others Jaswant Singh, then Finance minister if
defaults continue, it will be the end of the financial system. Till now, everything was in
favour of the borrowers. The lenders were being taken for a ride while the defaulting
industrialists flourished Dr Manmohan Singh Former finance minister and RBI
Governor This Act gives unreasonable discretion to the banks. What is also important at
this stage is not to see who have been sent notices, but who have not been. Questions
must be asked why these people have not been sent notices. P. Chidambaram Former
finance minister .If enforcement falters and NPAs continue their rise, it could help send
India towards the kind of financial crises that ravaged the tiger economies two years ago.
But South Korea, Malaysia and Singapore were better off then than India is today.
The proportion of NPAs to total bank advances was at that time about 7 per cent in those
countries in September 2000. Indias figure, as of 2001 was 11 per cent, though Ministry
of Finance (MoF) officials are quick to point out that NPAs of public sector banks, at
least, dropped from 24.7 per cent in 1994 to 11.4 per cent in 2001

What has changed?

Now once gain after 10 years after publishing of articles by Indian express, the eloquent
statements, appellations of the ministers to hoot out this NPA menace through stringent
legislations, banking sector has been in news for wrong reasons. Big borrowers from
public sector banks are big loan defaulters
Gross NPAs of domestic banks jumped to 4.2 % of total lending by the end of September
2013 from 3.6 % six months before, according to the Reserve Bank of India (RBI).
As per a recent warning by the RBI, bad loans (NPAs) could climb to 7% of total
advances by 2015.
In absolute terms, gross NPAs are estimated to touch Rs 2.50 lakh crores by the end of
March this year. This is equal to the size of the budget of Uttar Pradesh. The biggest
chunk of the soured debts is with state-run banks (Public sector banks or PSBs), which
account for two-thirds of loans but 80 % of the bad assets.
This is how the NPA curve has been moving in the recent years, as per a news report in
the Business Standard:

Gross non-performing assets (NPA) of public sector banks rose to Rs 1.76 lakh crore at
the end of June quarter from Rs 1.55 lakh crore at March 31, 2013.
On the other hand The Business Standard on 31-12-2014 reported: Cases Rise

Sharply But Recovery Drops

Only 18% of the total debt has been recovered as seen in the following table. The
reason for slow pace of recovery the policy paralysis of the government to make
tough of tough laws the paper quoted.

According to global rating agency Standard & Poors, Indias banking sectors non
performing assets (NPA) ratio is likely to surge to 3.9 per cent of total loans in 2013-14
and to 4.4 per cent in 2014-15, compared with 3.4 per cent in fiscal 2012-13.
The then Minister of State for Finance Namo Narain Meena, in a written reply in the
Rajya Sabha, said the NPAs of banks have shown a rising trend. The stress on the asset
quality is a reflection of the stress in the economy of the country.
The then financial secretary Rajiv Takru in a reference to a Cobrapost expose on how
bank officials bent rules for customers said. Bankers reckless, casual as bad loans rise.
Bankers are being reckless and casual towards lending, finance secretary Rajiv
Takru said on Wednesday, blaming them for increasing bad loans.
The government may increase the maximum penalty possible on banks for breaking
rules to Rs.500 crore from the current Rs.1 crore. Takrus comments come a day after
Reserve Bank of India governor D. Subbarao described the banking penalty cap in India
at Rs.1 crore as peanuts.
Sometime ago, in a paper on corporate debt restructuring, Reserve Bank of India Deputy
Governor K.C. Chakrabarty quoted statistics that revealed that the restructured advances
ratio to gross advances had gone up from 4.87 per cent in March 2009 (a year after the
financial crisis peaked) to 8.24 per cent in March 2012. By the 201213 financial yearend, it shot up to 10 per cent. Today, the estimated gross outstanding advances are
pegged at Rs.50 lakh crore, putting the restructured debt figure at roughly Rs.5 lakh
crore, compared to Rs.2 lakh crore as recorded four years ago he added...
The increasing cases of defaults and delayed debt recoveries have even attracted the
attention of the Finance Ministry, which, a few days ago, asked the banks to carry out
viability assessment of proposed projects, independent of the appraisals by leading banks,
before granting loan approvals. The Minister had also recently said if the promoters were
unable to pay back loans, they should be made to give up the management of the
The Hindu on August 16, 2013 covered a news item CBI opens probe into firms
defaulting on public sector banks. The media reported
These business houses secured huge loans from the banks after the 2008 financial
crisis, but either defaulted or escaped by restructuring the loans. Big business houses
that secured huge loans from public sector banks post2008 financial crisis, but defaulted
on repayments or charted an escape route through multiple restructuring of bad loans,
have now come under the Central Bureau of Investigations scanner for suspected willful
misappropriation of public money, running into thousands of crores. An inquiry has been
initiated into the public sector bank loan nonperforming assets (NPAs) to understand the
magnitude of the problem, which basically concerns the Finance Ministry. Big business
houses have in the past procured loans worth thousands of crores and it is suspected that
in several cases they have either defaulted or got the loans restructured, resulting in
further delay in loan recovery by the financial institutions. Whether it amounted to willful
misappropriation leading to embezzlement of public money has to be enquired into, a

senior CBI official told.The official said the agencys banking division had already
started an internal inquiry. It is only after we get to know the magnitude of the issue that
we can zero in on specific business houses to ascertain their role in bank debt nonrecovery. Sadly, we have noticed that the bleeding banks, due to various reasons, do not
usually come forward to lodge complaints seeking a probe. This exercise will throw light
on the irregularities, if any, in the process of loan grant and non-recovery / restructuring,
he added. The CBI, which has also sought expansion of its banking probe division, has
engaged experts as consultants for financial investigations. The soaring NPAs on account
of bad loans have in the recent past resulted in a huge setback to financial institutions,
especially public sector banks.
Finance Minister Arun Jaitley said on5-12-2014 In view of the major increase in their
non-performing assets (NPA), banks are taking a number of steps against wilful
defaulters to recover loans, "It is normal for the banks to have 2-3 percent of NPA. But in
the last 2-3 years, the NPA has increased substantially and gone up to 6 percent. Stress
assets have also been increased," Jaitley told the Lok Sabha during the question hour.
Actions have been initiated against those who have failed to repay the loan amount under
various provisions of the Indian Penal Code and civil laws, he added.
The report added the percentage of gross non-performing assets (GNPAs) for the banking
sector is expected to worsen from 3.9 percent of advances in fiscal 2013-14 to about 44.2 percent in 2014-15, Moody's analyst ICRA has said in a report
The New Indian Express Dec 29, 2014 reported Loan Write Offs for Large Public Sector
Banks May Soon be History writing off a loan is never an easy option for any bank. . It
was informed in the parliament .A whopping Rs 42,447 crore write off and
restructuring of loans in the year to March 31, 2014 by public sector banks was surely no
music for banks, the government or investors. Write-offs in 2012-13 was Rs 32,992 crore
and in 2011-12 Rs 20,752 crore. Cumulatively over the past five years, state-run banks
wrote off loans of as much as Rs 106,170 crore.
And above all There are reports in news papers that soon after Prime Minister launched
the scheme Pradhan Mantri Jan Dhan Yojana on this independence day Sources in the
finance ministry said that the PMO is keeping a watch on banks' rising NPAs, estimated
to be Rs 2 lakh crore. Source: (See: DNA Friday, 29 August 2014,

The high end loan-owners, most of whom are builders, manufacturers or managing
educational or medical institutions, account for 78 per cent of bad banking across the
nation, going by statistics provided by 26 nationalised banks to an RTI query by a Thanebased chartered account.
The affluent borrowers which total up to a miniscule 969 accounts, have collectively
defaulted on their scheduled loan repayments exceeding Rs 78,000 crore to the lending
banks as on December 2011. A vast majority of the defaulters -- 49.23 lakhs as on
December 2011-- across the nation were responsible for a gross Non Performing Asset
(NPA) of just over Rs 22,000 crore or a mere 22 per cent of the bad debts.
It means that people who borrow less pay more in interests and capital to the banks. But
those who borrow more have no liability whatsoever to repay their loans. Any person
who defaults on small or medium loans taken for his house, car or any entrepreneurial
venture has to face such humiliation from bank-appointed recovery agents and bank
officials that it leaves an imprint on his psyche. However, people who virtually rob banks
of crores of rupees go scot free despite all the half-hearted attempts by the banks to
recover the amount.
That is the reason we euphemistically define the acronym CDR as Cruel Denial of
Recoveries and / Consensus delay for recoveries and /or CRUEL DENIAL OF
Thus It is an irrefutable fact that cumulatively over the past five years,( i.e. from the
period of effect of 10 bipartite emphasis !) state-run banks wrote off loans of as much
as Rs 106,170 crore( Rs1.6 trillion )

On million= 1000 000 = 10 00 000 = 10 lakh
one thousand million is billion (9 zeros)
1000 000 000 = 100 00 00 000 = 100 crores
one thousand billion is trillion (12 zeros)
1000 000 000 000

1 Crore



1 Lakh



1 Million



1 Crore



1 Billion



1 Crore



As on the date of writing this article 27-12-2014

1 million USD is 63174950.00 Indian Rupee INR 1 billion USD is 63155000000.00
(6315 crores)
Whereas the GDP (nominal) of India and neighbouring countries as per the World
Bank (2013) are INDIA 232,287 Millions of US$), PAKISTAN232,287 Millions of
US$) BANGLADESH 149,990 Millions of US$), & NEPAL 19,415 Millions of US$)
In other words Cumulative write off loans over the past five years,( i.e. from the period
of effect of 10 bipartite emphasis !) of state-run banks as Rs 106,170 crore( Rs1.6
trillion) is more than combined GDP( nominal) of India, Pakistan , Bangladesh and
Nepal . This the money Indian Inc owe the state owned banks and to the government .
Whereas GDP48 of Least developed countries as UN classification in 2013 is only
US$804.4 billion .
(For list of least developed countries see
In other words Cumulative write off loans over the past five years,( i.e. from the period
of effect of 10 bipartite emphasis !) of state-run banks as Rs 106,170 crore( Rs1.6
trillion) is more than GDP of 48 least developed countries. This is enough money to fund
half of India's defence budget this year, is an open secret. What has come as a surprise,
though, is the fact that big borrowers-those who owe more than Rs 10 crore but have not
paid up on time-make up more than three quarters of the amount in default, data obtained
through an RTI application revealed.

Is it not starling?
If we take into account Total loans restructured by Indian banks under the socalled corporate debt restructuring (CDR) route crossed Rs.2 trillion(2,00,000
crore). In December2012. In the past quarter alone, banks restructured Rs.24,584 crore
of loans, up from the Rs.19,544 crore they recast in the previous quarter, to reach Rs.2.12
trillion of restructured loans. (The actual figure for restructured loans may be
around Rs.4 trillion as this estimate does not include bilateral restructuring cases
that banks undertake individually with firms). The write, off and CDR route has cost
the state run banks whooping exchequer which much more than the GDP ( nominal )
India and its neighbors and 48 least developed countries in the world . this is extent of
the is great bank robbery which the successive government in power is unable to arrest
other than making popular rhetoric press statements policy pronouncements under the
garb of banking reforms . .
Therefore are we not right in saying that "Financial Reforms" and NPAs &Scams
are like an Object and its Shadows!
Isnt it time to abandon the charade?

Whey we should oppose:

These gargantuan NPAs will be seen by general public with awe and there is not likely
to be any backlash against these companies. A man on the street will merely talk as to
how foolish were bankers but will not demand any action against the owners as they had
larger than life image and are viewed with awe.
And these willful defaulters are getting ready to mine the new loopholes of the new
law: no clear definition of whos a wilful defaulter; no prison sentences; nothing to stop a
defaulter from taking over a privatized bank (especially after the amendments to banking
bill banks borrowers can become banks directors) and paying off debts; and nothing
to stop their private life of luxury.
If the spirit behind the new law doesnt match the letter, if this mother of all bad loans
continues to grow, it will squeeze the financial system. In time, it could mean paying
more for your home or car loan, and getting less interest for your savings.
If you are just an ordinary tax-payer, the quintessential man on the street, why should you
be reading the series of exposes in the media time and again why should you be getting
angry? What questions should you be asking? And what answers should you be seeking.
The rich, after all, have always stolen. From the banks, from governments and, most of
all, from the poor. So whats new this time? You should bother precisely because now

there is a difference. The essence of free markets is fairness of opportunity and

accountability. Free markets run on impartial regulation, prudential norms, protection of
investors money from risks other than what an instrument of investment justifies for the
returns promised.
This Day Light Great Bank Robbery euphemistically called as NPA is not about
companies taking legitimate market risks. Its about total subversion of the
principles of free markets. So, here is the first question you should be asking. Why is
it that your bank pays only 4 % or so on your fixed deposits but charges 10 per cent
on your housing loan? Why should you pay 13 per cent on your car loan? And why
is it that you so often read on the front pages of the pink papers about fresh
government bailouts for your financial institutions? This money, too, comes out of
your pockets, your common tax kitty.
In civilised countries with free economies, banks work on spreads of no more than
two per cent. In India it is four. So, overseas, if your savings bring you four per cent
interest, your housing, loan would cost no more than 5.5 or 6. Here, you first pay for
the inefficiency of your bank, the overheads and the bloated bureaucracy.
Second, you also under-write your banks Non Performing Assets (NPAs). The big
guys steal, then get write-offs or bailouts. You and I meanwhile keep the banks
afloat by paying that additional spread on our borrowings.
A good question to ask, before that is done, is: who were the people sitting on its board
when these loans were given, where are the defaulters now and do their personal wealth,
lifestyles, match the bankruptcy of their lender? If it doesnt, why should we tax-payers
fund its revival?
But banks are always known to lose money and big banks lose big money. So, if you still
think why you should bother, here is a story former Prime Minister V.P. Singh used to
tell in the Allahabad parliamentary bye-election of June 1988 to explain to mostly
illiterate villagers why they should be angry about the Bofors scandal.
Your house has been burgled, he would say, and then explain how. When you buy a
matchbox for 50 paise, five paise go to the government as tax. With this the government
builds your roads, hospitals, bridges, schools, buys guns for your army. This is your
money. It has been stolen. Thats why I say, your house has been burgled.
What should worry us the sheer extent of the exposure to such accounts. Losses to
the tune of Rs 10,000 crores in just two accounts will shake the whole industry.
Even the wage revision due from November 2012 will be affected It will be the
Honest , hard working who will suffer - more pressures for profits, denial of decent
wage hike, no updation of bank pension etc. The total employees in the banking

sector (private as well as public sector) are about 9,00,000. Do you know that how
much loss of Rs 10,000 crores will work out per employee of banking industry as a
whole. It is about Rs 1,11,000/-. Thus, if banks fail to recover from these
companies, then each one of you (each peon, each clerk and each officer in the
banking industry) will lose more than Rs 1 lakh.
The cost of 25% increase in wage load demanded by unions
will work out to
mere infinitesimal fraction of the recovery of the restructured loans as on 31-032012 and cumulated write off over the last 5 years as stated above. Which would
have been otherwise not classified as of NPAs without costing any additional
exchequer to the banks if they have the will to recover! Is not now our demand is
The only bright side of the 1992 scamit revolutionised the market infrastructure,
Too little has been recovered and too many cases are unresolved, reducing the scam
trial to a farce .Justice or Farce?
What a far cry all this is from 1956, when Justice MC Chagla said after the Haridas
Mundhra scandal: After very anxious consideration I have decided that this enquiry
should be held in public. A public enquiry constitutes a very important safeguard for
ensuring that the decision will be fair and impartial. The public is entitled to know on
what evidence the decision is based. Members of the public will also be in a position to
come forward at any stage to throw more light on the facts disclosed by the evidence.
Justice should never be cloisteredit should be administered in broad daylight. He also
decided to take evidence on oath so that those who gave evidence did so with a sense of
responsibility and the knowledge of the consequences of giving false testimony. The
Mundhra enquiry was wrapped up in two years, including the appeal to the Supreme
Court. That record has never been repeated in the 56 years since that scandal.
The sheer quantum of the NPAs, a mild euphemism for outstanding loans owed to banks
by persistent defaulters, is mind-boggling although there may be some cases where for
genuine reasons advances have become NPAs, in most cases borrowers turn defaulters
Instead taking drastic and stringent action is taken against defaulters such as:
confiscation of the properties of wilful defaulters, imprisonment, and blacklisting
for all future advances and loans the government and bankers have resorted often
to bail out packages, including this preposterous , retrograde step of setting up of
holding companies as mentioned above to raise capital to provision for NPAs
present and future, which is bound to cause increase in NPA time and again .