Fifty companies owe more than Rs 40,000 crore to banks

FE George Mathew | Mumbai | Updated: Dec 06 2013, 09:42 IST

As much as 25 per cent of the total non-performing assets (NPAs) in public sector banks (excluding SBI) is accounted for by 50 corporates with Kingfisher Airlines and Winsome Diamond topping the list.

The combined default by the 50 corporates totalled to Rs 40,528 crore of bank loans. The total NPAs of public sector banks stood at Rs 1,64,461 crore. Vijay Mallya’s Kingfisher Airlines owes Rs 2,673 crore as per the combined NPA list of PSU banks released by the All India Bank Employees Association (AIBEA).

Winsome Diamond of Jatin Mehta defaulted Rs 2,660 crore, Electrotherm India Rs 2,211 crore, Zoom Developers Rs 1,810 crore, Sterling Biotech Rs 1,732 crore and S Kumars Nationwide Rs 1,692 crore. Among others, Winsome group company Forever Precious Jewellery has defaulted Rs 1,254 crore, Orchid Chemicals Rs 938 crore, Deccan Chronicle Rs 700 crore and Delhi Airport Metro Express by Rs 346 crore.

Companies such as Educomp and several infrastructure projects such as Lanco Hoskote and also figure in the list. “Since the RBI and the government are not publishing the list of loan defaulters, AIBEA will shortly publish a booklet containing the names of the top 30 defaulters in each bank,” CH Venkatachalam, general secretary, AIBEA.

Credit information companies like CIBIL, which are authorised by the RBI to keep track of bad lans data, reveal only the names of defaulters against whom banks have filed suits.

“Banks should publish the list of loan defaulters of Rs 1 crore and above and make willful default of loan a criminal offence. There should be an investigation to probe the nexus and collusion while siphoning off bank money. The government should amend recovery laws to speed up recovery of bad loans,” Venkatachalam said.

“We are witnessing looting of public money from the banks. On paper every thing is perfect, but borrowers don’t have the capacity to set up the project and repay the loan,” he said. Most of these 50 defaults occurred in the last two years.

“If you include the NPAs of around Rs 15,000 crore in SBI, bad loans of top corporates would touch Rs 65,000 crore. Details

on SBI’s NPAs would be released in a couple of days,” he said. While the popular notion suggests that the rising NPAs are due to the fallout of the global financial crisis, RBI data indicates that the credit administration in the banks had started weakening and the asset quality had started deteriorating even before the onset of the crisis. Slippages exceeded reduction in NPAs, especially post crisis, as the ratio of reduction in NPAs to slippages fell dramatically – from about 105.3 per cent in 2001-07 to 70.8 per cent in 2007-13, according to the RBI.

“The ratio of slippages to recovery and upgradation represents the extent to which banks have been able to reduce their NPAs through recovery efforts. The ratio for the banking sector as a whole deteriorated from a low of 125.4 per cent in 2005-06 to 264.1 per cent during 2009-10 and remained elevated at 257.0 per cent in 2012-13,” the RBI said.

RBI Deputy Governor KC Chakrabarty had last month criticised the approach of banks in handling bad assets. “Write offs contributed significantly to the reduction in the quantum of gross NPAs (in some years, write offs accounted for nearly 50 per cent of reduction) as compared to actual recoveries and upgradations. These practices clearly engender moral hazard issues as they reduce the banks’ drive to improve recovery efforts.”