Thursday, 31 March 2016

Long Term or Short Term ?

As per media reports , Vijay Mallya has offered to repay Rs 4000 cr of debt by Sept . I presume he would offer to repay the balance at some unspecified date

Supreme Court has asked RBI and the lending banks to come back in a week with their response to Mallya's offer

In a normal course , such restructuring of a loan would be a routine affair, without anyone in public paying any attention

But these are not " normal " times  !

Which bank would dare to be criticized for " being soft / being in collusion " , after Prime Minister's public announcement two days back that :

" We will ensure that every rupee of loan is recovered . We will not let the rich rob the poor and get away "

Apparently , PM wants the lending banks to,

*  Go beyond the symptoms and uncover the true nature of the disease

*  Stop worrying about immediate write-offs and focus on future health

*  Ensure that their soft approach does not set a bad precedent to others

*  Surgically cut the diseased limb to ensure that Cancer does not spread

*  Send a loud and clear message to,

   #  72 companies which have failed to service debt ( Rs 5.53 lakh*crore )
        for two years

   #   40 companies which have failed to service debt ( Rs 2.94 lakh*crore )
        for three years

I can understand why RBI does not want Supreme Court to reveal the names of companies in default , who have loan outstanding of over Rs 500 Cr . RBI feels that this may have " adverse impact " for business

But what about " adverse impact " for the public , using whose tax money , 29 Public Sector Banks , quietly wrote-off , Rs 1.14 lakh*crore of bad debt between 2013 and 2015 ?

And the " adverse impact " on Central exchequer by re-capitalizing of these banks , using taxes paid by you and me ?

Shri Arun Jaitley says :

Amount of re-capitalization will be linked to the speed with which these banks manage to recover their NPAs

I hope , he has also told all banks , in unmistakable words :

" You will neither restructure these existing loans to the defaulters nor make any further advances to

 #    these defaulting companies,  or

 #   its associate companies , or

 #   directors of these companies ( personal loans )

 #   relatives of these directors ( personal loans )

 #   persons who are sureties for these defaulters

You will launch court cases against such defaulters for repossessing their properties and wherever there are cases of " cheque bounces " , you will obtain from the courts , " Non Bail-able Warrants " against such directors

You will share with the public at large , full details of the defaulters online

You ( bank directors ) will not be paid any salary till you recover these loans

If you fail to recover in 24 months , you will get a sack ! "

Dear Shri Jaitleyji :

If anything that I have said above sounds too harsh to you , just hang on the wall across your table , a photo of any of those thousands of farmers who are committing suicides , every year because rains failed and they could not repay their bank loans !

Right below that photo , dynamically display statistics of :

*  Number of farmers who committed suicide in past 24 hours .............

*  Cumulative no of Farmer suicides , so far , this year.........................

------------------------------------------------------------------------------------- / blogs

01  April   2016


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