Non-performing Assets

Perhaps there is no other country in the world where banks lend money as recklessly as tiolized (or state-run) banks in India do. What has been only too evident over the years is that our tiolized banks have turned the whole business of lending huge sums of money to people who are unlikely to repay their loans into a fine art. There is even a fancy me for the dirty game of lending money to people in high places who are never going to repay their bank loans. Such loans that are never repaid and have to be written off eventually are called ‘non-performing assets’. This grandiose term for bad loans invented by bankers tends to give the impression to the uninitiated that efficient performance was expected from the funds rather than from the borrowers. What is also very clear is that bankers are not ive enough not to know which of the loans will be repaid and which of them will not. Even as they provide a hefty loan to some individual strongly recommended by some minister or prominent politician they know very well that loans advanced to influential politicians (or their nominees) who have no experience of efficient handling of large sums of money are bound to turn into non-performing assets. They also know about the price that may have to be paid for not sanctioning the loans that are not going to be repaid. In any civilized country, both the borrower who failed to repay the loan and the bank mager who advanced the bad loan irresponsibly would be punished. In India both the borrower and the provider of the loan mage to go scot free.

According to recent assessments, tiolized banks in India have written off nearly Rs 2.42 lakh crore worth of non-performing assets (NPAs) or bad loans between April 2014 and September 2017. In other words, in just a little more than three years our tiolized banks have written off nearly Rs 2.42 lakh crore of public money because they had advanced loans to undeserving borrowers who never had any intentions of repaying the loans. And in most cases the bankers knew beforehand that they were not going to be able to recover the huge amounts they had lent. How else does one explain the fact that people like Vijay Mallya are able to borrow thousands of crores of rupees from several banks despite having systematically defaulted in repayments of several loans? How does one explain away the fact that someone like Neerav Modi and his uncle are able to defraud a bank to the tune of nearly Rs 14,000 crore and escape to another country and remain safe from the long arm of our weak laws?

What is extremely saddening is that in India, the honest individual who is in urgent need of a small loan for an unexpected emergency does not find it as easy to borrow a few thousand rupees from a tiolized bank as a Vijay Mallya or a Neerav Modi does to borrow thousands of crores of rupees from any of our banks. The most astonishing aspect of the entire business is that our banks should be so willing and able to advance loans to people with very poor track records as borrowers but with very powerful connections within the corridors of power. Such total injustice in respect of economic policies is already giving India a bad me in intertiol circles. This was only to be expected in a country where banks spread the red carpet for notoriously bad borrowers and create many hurdles for the honest borrower even in the matter of small loans. It is high time the people of India demanded to know from our banks what kind of collateral or security our bad borrowers furnished the banks for their huge bad loans that are about to be written off because our tiolized banks systematically preferred disreputable borrowers to honest individuals and corporate groups. This is systematic misuse of public money for the benefit of dishonest borrowers. After all, Rs 2.42 lakh crore is an amount that can take care of the development plans of an entire State for more than a year.