Loans in LAC of crores- Recovery Zilch

To top it, these cases continue to languish in the NCLT, despite the law saying that they must be resolved in a time-bound manner

1. India has been struggling to resolve the giant crisis of NPAs, which has crippled the Indian economy and banks too. So grave has been the crisis that by the government’s own admission, 11 banks were rendered bankrupt and were put into PCA by the RBI, to be nursed back to health. In the last three years alone, the government has pumped in over Rs. 2.50 lac crores to recapitalize these banks and more are likely to be infused in order to revive these bankrupt banks.
2. This huge NPA crisis involving bad loans of about Rs. 15 lac crores did not get created overnight. It has been built up over the years, with the utter negligence and collusion of the bankers, the regulators, the government and the dubious borrowers of course. The bankers were aware of it and kept postponing the recognition of these bad loans and the underlying scams, by coming up with one restructuring scheme after the other in succession, i.e. CDR, SDR, S4A, etc., only to hide the reality and in the process, the banks and the economy only got crippled further and further. As a result of the collusion of all those who mattered, the laws of the land were grossly insufficient to resolve this menace. The DRT and courts were no match to resolve the banking scams and help banks to recover their bad loans. Then came the IBC in 2017, which the government sycophants claimed was the ultimate solution to the NPA crisis, with a statutory time-bound timetable to resolve the NPA crisis. By now it is already clear that the IBC and the NCLT, neither give a time-bound resolution to the crisis and nor do they result in any recovery of bank loans that were promised when the IBC and the NCLT came into the picture. The various amendments to the IBC by a concerned government have done little to improve its efficacy and that is perhaps to do with the fact that the loan accounts that they have been dealing with, have been utterly bogus and fraudulent, with little substratum available to recover.
3. A recent report says that in 354 bank loan cases undergoing liquidation in the NCLT, involving bank loans of Rs. 3.55 lac crores, the chances of recovery are almost NIL. At the best, as against these loans of Rs. 3.55 lac crores, the recovery for banks will be Rs. 15165 cr. which is a mere 4% or perhaps NIL when it finally happens. Out of 9 cases that were resolved under liquidation, 8 resulted in a NIL recovery. In a case like Orchid Healthcare, involving bank loans of Rs. 3500 cr., the recovery under the NCLT process was NIL and in the case of Kakatiya Engg., as against bank loans of over Rs. 50 crores, the recovery was a mere Rs. 5 crores. To top it, these cases continue to languish in the NCLT, despite the law saying that they must be resolved in a time-bound manner.
4. To us, these recovery figures of a zilch recovery mean that there has been an utter loot of public funds and it is the bankers and the regulators, who have presided over it, by a combination of collusion, corruption, incompetence, and negligence. It gives rise to the following questions and observations as an ordinary citizen of India, demanding accountability:-
5. What made bankers indulge in such blatant and scammy lending of lacs of crores to the most unworthy borrowers who have looted the system? What was their compulsion to lend?
6. These giant fraud loans did not get created overnight but were accumulated over the years. The bankers were apparently collusive/negligent, but what were the auditors and the regulators doing?
7. Loans were given and were allowed to be siphoned away from bank accounts under the watch of the bankers. Are they not direct accomplices in their scams?
8. Loans were certainly given and enhanced year after year, on the basis of bogus financial statements, which were totally disconnected from the ground reality. What was their inducement and compulsion to do so?
9. Big frauds certainly mean that all big authorities/names were involved in it, starting from bank CEOs to auditors, raters, etc.
10. How were such huge loans given without any real security whatsoever, which explains the pathetic recovery?
11. The real perpetrators of these giant scams are top babus and netas. When will they be identified and punished, none of whom have been even named so far, for obvious reasons?

These kinds of loans and the zilch recovery explain the bankruptcy of banks which are being nursed to health. With the recovery of bad loans being so poor, the only way out is a massive continued recap of banks, with no guarantee that history will not be repeated, since one of the main culprits ie. the neta and the babu have gone scotfree so far.