Honest Dupes
They say people who don’t break queues cannot get ahead. It
explains the greedy chaos Indians can manifest faster than any flash-mobbing
crowd elsewhere. Another saying says good guys finish last. In poll season this
time however, thanks to the Supreme Court and a failed attempt to overrule the
verdict via an ordinance, the ‘good guys’ stand a better chance because the
convicts are debarred and removed from the field. Though, it doesn’t really do
the trick in its entirety, because the crooks can rule by proxy via wives,
sons, uncles, aunts, mistresses etc. and even technically untainted Hench- men;
all of whom can stand in for them .
Another rather famous near proverb does say that a rich man
cannot enter the kingdom of heaven. In fact, that it is easier for a camel to
go through the eye of a needle, it says. There might be truth as opposed to
Socialism in this one, truly speaking, and gazing out at what is going on all
around.
Consider this. At a time when the Non-Performing Assets (NPAs)
of public sector banks (PSUs), at the highest ever, are threatening to sink the
banking system, it is revealed by the RBI that loans of rupees one lakh crores
have been written off over the last 13 years. This means, over the whole of the
current UPA regime, and a little before it too. The outstanding numbers, are
even higher, closer to double this figure, at some Rs. 1, 85, 00,000 crores,
principal and interest included, but not
all of it declared NPA or written-off as yet. That tends to be done at yearly
rests of some Rs. 15,000 crores.
But then, declaring an outstanding amount as a bad debt
actually helps the bank save taxes and
takes the pressure off trying to recover the money. Deputy Governor of
the Reserve Bank of India Mr. KC Chakravarty, ‘flaying’ the PSU banks for this
practice, calls this a ‘technical write-off’.
Bottom line, this RBI certified figure means borrowers have
walked off with Rs. 100,000 crores or more, 95% being ‘big borrowers’ from the
‘priority segment’ against lending mandated by the Government. Most , with at
least a borrowing of Rs. 1 crore or above. This is a national outrage, of
course, but the revelation seems to be swamped by all dimensions of other
maladies.
When these borrowers do not repay an instalment of the debt
and interest outstanding for at least 90 days beyond due date, it turns into an
NPA. And this non-payment has resulted in the banks writing it off despite no
pay- back/recovery or consequence for the borrower! What a neat way this is to
embezzle millions!
The ‘big loans’ of over Rs. 1 crore, are authorised and
sanctioned by the Boards of the banks, and so, incredibly, by way of excuses,
there is no one down the ladder that goes out of his way to follow up for
recovering the money. And with a ‘technical
write-off’ effected, there is no outstanding showing on the books of the banks
either.
This is the case with the SBI, the biggest PSU bank with the
largest amount of such NPAs, but smaller banks such as Bank of Maharashtra,
Syndicate Bank and so on, are much more vulnerable to capsizing, because they are listing with 30% of their
loans turned bad.
No wonder then that the Government is issuing new banking
licences, and hoping desperately to spread the muck all over the system, even
as there is a fresh infusion of capital and a new set of debtors.
This loss, conveniently jettisoned from the books of the
banks over 13 years, in aggregate, is more than the Rs. 60,000 crores worth of
farmer loans written off by the UPA Government in the face of a slew of farmer suicides. Though there too, in
the waiver, there were a lot of big farmers benefited rather than the truly
impoverished who never could qualify for bank loans even as they were the very
core of the ‘priority segment’.
Besides, it played very well politically, and contributed to
the re-election of the UPA in 2009. But this time around, on the threshold of
2014, the Bank NPAs are perceived to be of a piece with all the other corruptions
and scams that seem to be riddling this government. Could the loans be wilful and deliberate
pay-offs to supporters and well-wishers using, as usual, public funds?
The Congress Party does have a tendency to apportion public
money as if it were their own, and in order to obtain political mileage out of
it. It is almost as if the PSU bankers are hand-in-glove with the
defaulters. But, it is also clear that
in a rent-seeking regime such as we live under at present, any collusion of
this kind would not be surprising. Neither is the myth-making of being the most
interested in the poor and needy and the welfarism made to look as if it is
coming from the party coffers.
What then is to be done about the vanished Rs. 100,000
crores? Nothing. It is all legal and
above-board. Also, it is difficult to
say how it will play. After all, who
knows who will vote for whom and why.
(874 words)
November 17th,
2013
Gautam Mukherjee
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