Fix responsibility on top brass for bad loans, says union

In view of the rising bad loans in state-owned banks, the All-India Bank Employees Association said the Government should set up a special investigation team to probe the decisions of their credit appraisal committees in cases where borrowers have turned wilful defaulters.

Further, the Association also wants responsibility fixed on banks’ top brass for the loans that have turned bad, allow banks to share information on non-performing assets and wilful defaulters under the Right to Information Act, and declare wilful loan default as a criminal offence.

Public money at stake

Vishwas Utagi, General Secretary, Maharashtra State Bank Employees Federation, an affiliate of AIBEA, said public money is at stake when banks enter into one-time compromise settlements with loan defaulters, or write off bad loans or allow corporate borrowers to restructure debt.

Pointing out that the credit appraisal committees of public sector banks had powers to sanction single loans up to Rs 400 crore in the case of large banks and up to Rs 250 crore in the case of small banks, he alleged that promoters of large defaulting companies diverted bank loans into real estate and floated cricket outfits for competing in domestic league matches.

The Association will observe an ‘All-India Day’ on December 5 to create public awareness, among others, about the necessity to publish the list of bank loan defaulters of Rs 1 crore and above; make wilful default of bank loans a criminal offence; probe nexus and collusion in the grant of loans; and the need for stringent measures to recover bad loans.

“When income tax defaulters’ list can be published, then the list of wilful defaulters of bank loans can also be made public. Why should banking secrecy laws apply to these defaulters when banks have given loans to them from public money (deposits)?” said Utagi at a press meet.

Bad loans in public sector banks rose four-fold from Rs 39,000 crore as in March 2008 to Rs 1,64,000 crore as in March 2013.

(This article was published in the Business Line print edition dated December 5, 2013)