Yechury wants Modi to reject ‘bad bank’ proposal

The CPI (M) General Secretary Sitaram Yechury has opposed the proposal to create a “bad bank” to deal with the NPAs by corporate houses.

In his second letter to Prime Minister Narendra Modi, Yechury has opposed this. In the first letter, he had cautioned the Centre against recapitalisation plans of public sector banks. Citing recent reports, he said that bad loan provisioning for most state-owned banks had doubled, and even trebled, in some cases in 2015-16.

“To make matters worse, the core earnings of most of these banks have fallen grossly short of the requirement for bad loan provisioning. There has been a lack of concerted effort to recover these bad loans, and your government has instead waived ₹59,547 crore of bad loans of big borrowers in 2015-16. All this while the farmers continue to be hounded for repayment of minor amounts in drought years,’’ he said. He said big borrowers have viable assets which can be easily recovered by banks, if backed by political will and determination.

“Instead, we have seen a proposal to divert all the bad loans from state-owned banks by creating a single ‘bad bank’. It is an attempt to portray a clean-up of bank account books by diverting the bad loans to a separate new entity, which will still be government owned,’’ he added in the letter. Yechury said the proposed “bad bank” will still be furnished by public money as all the other banks will be recapitalised by the government, while big borrowers would be allowed to go scot-free at the cost of the honest tax-payer.

“This amounts to the cronies being rewarded for their profligacy, bad business practices and their lavish personal lifestyles by the hard earned savings of the vast majority of the middle classes and the poor of this country,’’ he said.

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