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The United Forum of Bank Unions (UFBU), a representative body of nine bank unions, on Thursday demanded that the Centre and RBI take steps to strengthen public sector banks rather than looking to dilute state shareholding in such banks, bring consolidation or privatise them.
The attempt should be to recover the non-performing loans and not write them off, they said, adding that the current policies on the banking front are against public interest.
Opposing government policies on banking sector, thousands of bank employees are to go on morcha to Parliament on Friday.
“Eighty-nine companies account for as much as 80 per cent of the non-performing assets (NPAs) of nearly ₹9 lakh crore. We want a change in law so as to declare wilful defaulting of bank loans as a criminal offence and ensure that criminal action is taken against the defaulters,” CH Venkatachalam, General Secretary, All India Bank Employees Association (AIBEA), said at a press conference here on Thursday.
The UFBU is also of the view that the newly introduced resolution process — through the insolvency and bankruptcy code — will not yield any benefits to the banking system.
“Even in the initial 12 cases referred for insolvency proceedings, money will not come back to the banks, but the birds (promoters) will escape,” Venkatachalam said.
The recovery laws need to be drastically amended and more debt recovery tribunals need to be set up, he added.
There is a need for fast-track courts to deal with high value NPAs. Also, the RBI Act must be changed to enable the central bank to publish the names of wilful defaulters, he said.
Escape routeS Nagarajan, General Secretary, All India Bank Officers’ Association, said the insolvency and bankruptcy mechanism will end up as an “escape route for those 12 people (initial cases referred for insolvency) who do not want to return money to the banking system”.
Post the insolvency ordinance, the RBI had referred a first set of 12 cases to the banks for the latter to initiate insolvency proceedings before courts.
“We want to draw the attention of the government that they cannot turn a Nelson’s eye to the banking sector. They need to take stringent measures to recover the bad loans,” another UFBU member said.
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