August 10, 2017, New Delhi: “The government, which is arguing against the right to privacy in Aadhaar, is fighting for the privacy of large corporate defaulters,” said eminent lawyer Prashant Bhushan, who has raised the issue of the non-performing assets (NPAs) through the two PILs at the Supreme Court.

Bhushan, who was saying this in the context of RBI’s refusal to disclose the list of loan defaulters despite the Supreme Court’s judgment, was speaking at the public meeting on what is threatening public sector banks in India in New Delhi. While demanding transparency, he said that lack of it leads to crony capitalism, which is the root of NPAs. He emphasised the due diligence on loan, feasibility of the project, and repayment history of the promoters before granting loans. He further said that in the absence of such established procedures, when one bank denies the loan to promoters, they approach other banks to get loans for the same project.

Kavita Krishnan, the Polit Bureau member of CPI-ML, compared the total NPA of Rs.11 lakh crores with the 2G scam and said that the poor man and women of the country are paying the price of the crony capitalism. She pointed out the government and banks discriminatory attitude towards the ordinary people by saying that on the one hand, they name and shame poor defaulters while withholding the names of the wealthy defaulters.

Taking forward Krishnan’s argument, Dr Sunilam, former MLA, and National Convenor of NAPM and a farmers leader from Madhya Pradesh said that the loans and farmer suicides are interlinked as the loans under priority sector lending are now given to the agro-business and big corporates, which are involved in farming.

Dr Thomas Franco, general secretary of All India Bank Officers’ Confederation and Convener of UFBU, mentioned about a visible change in credit pattern of the banks. He said, “In 1991, 99.3% of the loans were less than two lakhs, whereas this percentage has reduced to 6.7% in 2016. “ He further said that the change in priorities could also be ascertained from the fact that today 11,643 people have a credit limit of Rs. 100 crore or more, which cumulatively forms the 36.41% of the entire banking system.

While calling the solutions provided by the government as inadequate, Gautam Modi, general secretary, NTUI, emphasised the need of coming together of workers, middle-class and others to save the banking system. He emphasised on the recovery of loans by the defaulters and warned that the socialisation of debt would result in asset stripping and destruction of the sectors. He said that company is a social asset, consisting of workers, their skills, etc., and not just shareholders.

Prasoon Mukherjee, a member of parliament and a former banker, said that he is concerned about the health of the public sector banks because of the policies of the present government in resolving the issue of bad loans. He assured that he would extend all possible help in raising matters in Parliament and elsewhere.

While the public meeting was underway, the Modi government tabled the FRDI (Financial Resolution and Deposit Insurance) Bill in the Parliament. Franco said that the government’s measures to address the NPA are more in the line to write-off the loans and not the recovery of loans. This would further harm the interest of banking sector in the long term by forcing them into bankruptcy. He argued that the bill is influenced by the multinational consultants like BSG, Delliote, PWC, Mckensy, and experts were not involved in drafting it.

The public meeting, which was organised by United Forum of Bank Unions (UFBU), National Alliance of People’s Movements (NAPM), and New Trade Union Initiative (NTUI), saw coming together of the representatives of multiple banks, insurance companies, and workers union, activists, researchers, and politicians to share their experiences and discuss the issues related to bad loans, its impact on society and the financial system, government’s response in the form of bank mergers, and recent legislations like Insolvency and Bankruptcy Code (IBC), the Banking Regulation (Amendment) Ordinance, and the Financial Resolution and Deposit Insurance (FRDI) Bill.