Congress bad-loan poser to govt
New Delhi: Senior Congress leader Ahmed Patel on Wednesday asked the government whether it was considering the transfer of all non-performing assets (NPAs) to a government-controlled bank.
Patel tweeted in the morning: "Is it true that the Government 1. Ahead of elections wants to water down RBI's NPA circular of Feb 2018 & protect big defaulters from going to bankruptcy proceedings? 2. Is reconsidering the disastrous idea of transferring all NPAs to a government-controlled bank?"
The Congress's concern is born out of caretaker finance minister Piyush Goyal's announcement of a committee headed by Punjab National Bank chairman Sunil Mehta to study the feasibility of setting up an asset reconstruction company that could acquire the bad loans.
The RBI circular Patel referred to set stringent conditions on corporate defaulters on repayment, which the government is said to be unhappy about. The circular suggests that corporate groups that have defaulted on loan repayment will have to opt for bankruptcy proceedings from October 1, 2018.
Although the Narendra Modi government has publicly claimed that NPAs are a legacy issue passed on by the previous UPA dispensation, it has never come upfront to share details with the public. The Congress has fiercely contested the government's excuse of legacy, asserting that the NPAs rose phenomenally under the Modi government.
Now that the RBI has taken a tough stand on the issue, the government is seeking to water it down. The Congress feels the government won't be interested in acting tough against large corporate houses, which party chief Rahul Gandhi has been constantly targeting for being close to Modi, in an election year. The industry body CII has supported the "bad bank" idea.
Former finance minister P. Chidambaram, who has constantly maintained that NPAs were rising because of the government's incompetence, rising frauds and mismanagement, tweeted on Wednesday: "A major newspaper reported on Wednesday that bank frauds increased in both number and value over the last three years.
"Will the government describe this also as a legacy issue? In 2017-18 alone, 5904 bank frauds of value Rs 32,361 crore were reported. Whose legacy are these frauds?"
The business daily Mint reported on Wednesday that the gross NPAs of listed banks have grown 44 per cent in the past one year to Rs 10.25 trillion, with public sector banks accounting for Rs 8. 97 trillion.