Take quick action against defaulters, MPs tell bank chiefs

Members of the Public Accounts Committee of Parliament are not happy with the response of public sector bank chiefs to their queries on the progress made in recovering the non-performing assets (NPAs).

As the panel was informed that public sector banks are dealing with ₹2.55-lakh crore of NPAs or bad loans, which amount to 5.2 per cent of the total gross advances, the members wanted quick action against the defaulters. Coal, steel, power and infrastructure sectors contribute to a major chunk of the NPAs, the panel was told at its first meeting on the issue here on Friday.

The members also wanted to know why the names and details of the owners, directors and senior executives of defaulting companies are not publicised by the banks. “They (the banks) are keen to publish the name of a poor farmer if he is unable to pay his loan. But, why Vijay Mallya (owner of Kingfisher Airlines) is not getting the same treatment,” asked a member.

To this, the bankers said publishing the names of corporate honchos may affect investor sentiment. The members, however, were not ready to buy this argument.

The Government had released in 2014 a list of 30 companies, which are in the top of the defaulters’ list. The list included Kingfisher Airlines, Zoom Developers, Surya Pharmaceuticals, Pixion Media and STCL Ltd.

The bankers told the panel that the list, prepared in 2013, will be revised soon. The NPAs of private banks is ₹31,461 crore.

Representatives of the Finance Ministry, Reserve Bank of India, State Bank of India, Bank of Baroda, Punjab National Bank and IDBI Bank appeared before the panel. The members wondered why the NPAs have risen over the years despite passing the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act in 2002 and setting up of Debt Recovery Tribunals.

The bankers replied that legal proceedings are taking time and tribunals are not functioning properly due to shortage of staff and other such technical issues.

The members expressed concern over the situation that NPA on account of corporate lending is increased in the last two years.

They also raised questions on the quality of appraisal of lending, the soundness of the proposal, the calibre of management team, the process of recovery including invocation of corporate guarantees and personal guarantees by promoters.

The bankers replied that in most of the cases, the loans are provided without any personal guarantee since the amount is huge and supposed to be invested for infrastructural development of the country.

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