begin, the depositors of a bank are an important group of stakeholders because it is
their money which the bank uses for generating revenue.The responsibility of the bank is
to provide the safety of the depositor's capital and a reasonable return on the deposit.
In the first place this primary responsibility is lost sight off when sanctioning loans.
The second reason is the feeling that having given the loan, the managers can shirk
their responsibility to control its return from the loan takers at the appropriate time.
The Bank seems to dump the onus for loan repayment on the loan taker. Careful assessment
of the repayment ability is either not done or if done is only left for the records and
not used to control further loan taking.
A third reason is the self interest of the group of office bearers and the easy
availability of ready money for skimming for private use. There is also the willingness
of the loan taker to part with a portion of the loan.
There is a saying: if one borrows in thousands then the worry is of the loan taker; if
the loan is in millions then the worry is that of the banker. In the case of bad loansit
is nobody's worry
Best Regards,
K.PAranjpe
On Sun, 26 Oct 2014 11:17:14 +0530 "Virendra Goel"
> Banking industry and the government has been harping on recovery of loans rather than
finding the cause for inability of buyer to pay. There are two types of defaulter:1.
Willful defaulter – who manipulates the things to take advantage of the banking
system's weakness in monitoring the loan and loopholes the law governing the banking
loans and recovery.2. Defaulters who have incurred the losses. One major cause of
entrepreneurs losing money is economic instability causing unexpected fluctuations in
demand and supply and in costs. In such cases banks need to make a realistic assessment
of situation to evaluate if there is any scope of recovery by further funding and do the
need based funding instead of short funding or undesirable liberal funding . In such
cases banks start focusing on recovering their loans rather than helping the borrower
thus pushing the borrower in a corner resulting in increasing the volume of bad loans.3.
As Director of State Financial Corporation, I noted two more factors of loans going
bad:a. Every project has a kind of critical factor to ensure the success of project.
Assessing authority need to identify such critical factor of the project and evaluate if
this critical factor for the particular project is favorable and will continue to be
favorable for a reasonable time till the projects' limbs are fully grown instead of
focusing on DSCR and DE ratios or Margin Money availability.b. Liaison is one tool that
has been used by big and mighty to influence this decision making where instructions are
passed from top to bottom to find ways to oblige instead of critically examining the
requirement and possibility of its recovery – one will find this factor in case of
almost all the large loans gone bad.RegardsVirendra Goel From: join_mtc@googlegroups.com
[mailto:join_mtc@googlegroups.com]
Sent: Sunday, October 26, 2014 6:42 AM
Subject: [MTC Global] Increasing Bad loans in the banking sector in IndiaDear
friends,Good morning.================================================================BAD
LOANS'At a time when the Government is trying their best to push through their various
efforts and proposals to implement banking sector reforms like privatisation, mergers,
etc., what is really required today is to address and tackle the problem of alarming
increase in the bad loans in the Banks. The so called reform measures recommended by
Committee after Committee are retrograde and regressive but recovery of the huge bad
loans will alone make our Banks more viable, vibrant and effective. In order to
highlight this issue, AIBEA and AIBOA have decided to observe an exclusive All India Day
on 25th September, 2014.The following figures will reveal how alarmingly the bad loans
in the Banks are increasing.31.03.200839,030 crores31.03.200944,954
crores31.03.201059,927 crores31.03.201174,664 crores31-03-2012117,000 crores31-3-
20131,64,461 crores30-9-20132,36,000 crores31-3-20142,50,000 crores
Fresh Bad Loans - Rs. 4,95,000 crores in 7 years in PSBsFresh/new NPAs during 2009-
1044,818 CroresFresh/new NPAs during 2010-1158,226 CroresFresh/new NPAs during 2012-
1392,808 CroresFresh/new NPAs during 2012-131,19,613 CroresFresh bad loans in the last 4
years (2009 to 2013 )3,15,465 CroresFresh bad loans in the last 7 years (2007 to 2013
)4,94,836 CroresBad Loans restructured & shown as good loans (June 2014) Rs. 2,51,000
crFresh Bad loans in the last 7 yearsRs. 4,95,000 crProfits adjusted for provisions
towards bad loans (2008 to 13) Rs. 1,40,000 crBad loans written off in the last 13 years
Rs. 2,04,000 cr RESTRUCTURING OF LOANS & SALE OF BAD
LOANS/NPAs:As onNo. of A/cs Restructured under CDRTotal Loans restructured31-3-
200918486,536 cr31-3-2010215104,299 cr31-3-2011242111,914 cr31-3-2012292150,515 cr31-3-
2013401229,013 cr31-3-2014476330,444 cr30-6-2014486348,502 cr
Live cases under CDR today: 31-3-2014 280 accounts
Rs. 242,259 croresSr. No.IndustryLOANS GIVEN (Rs. Crore)1Infrastructure57,9062Iron &
Steel40,7833Textiles21,9904Power20,2535Ship-Breaking/Ship
Building16,7926Construction16,0627Telecom10,7858Pharmaceuticals9,2499NBFC6,97610Engineer
ing5,668Total Loans restructured under CDR in above 10 sectors2,06,46430-6-2014281
accountsRs. 251,611 crores(Source:AIBEA/AIBOA)--
==========================================================================With
regards,Dr. K. Sampath Kumar,B.A. (Economics), BGL, M.Com., M.Phil., Cert. A.I.I.B.,
MBA (Finance), MBA (HR & Marketing), ACS, FCMA, Ph. D.,
Professor, SSN School of Management
C/o. SSN College of Engineering
Rajiv Gandhi Salai (OMR)
KALAVAKKAM - 603110
Kancheepuram District, Tamil Nadu, India
Landline : 044-24860668
Mobile : 9094405733
Success consists of getting up
just one more time than you fall
-- Oliver Goldsmith--
MTC GLOBAL- Educate, Empower, Elevate
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