NPAs: Unjustifiable to deny or deprive bank employees and officers of their rightful demand for pay hike

By Gautam Thaker*
Collusion of trinity of the Government, politicians and senior officers of banks over the last four years has dealt a death blow to the banking sector. Because of bad loans to the tune of thousands of crores of rupees, the sector's economic condition appears to have turned serious and pitiable. Mallya-Modi, after having availed of loans of thousands of crores, do not repay but migrate to foreign countries as defaulters. The administration is caught sleeping in preventing or detaining them. Looking at the entire scenario, the picture appears to be bleak.
In order to encourage advances and to augment development, the Government of India pumped in capital to the tune of Rs 80,000 crore in 20 of public sector banks. This fund was allocated under the re-capitalization scheme. The Finance Ministry took this step in the last quarter of 2017-18. Subsequent to this, after the quarterly period, nine of these banks, to whom this capital assistance was extended by the Government, registered a loss to the extent of half the amount of the assistance. In the light of huge losses incurred by banks, 70% of the capital assistance extended in recent times would have been eroded or wiped out.

The table here shows that, although during the last many years, banks have consistently earned operating profits, nearly 70% of hard-earned profits have evaporated due bad loans or non-performing assets (NPAs). Net profits are getting reduced due to bad loans and not due to any reasons attributable to the employees and officers of the banks. Hence it is unjustifiable to deny or deprive bank employees and officers of their rightful demand for pay hike.
NPA figures were Rs 2,29,278 crore in the financial year 2013-14; Rs 2,80,481 crore in 2014-15; Rs 5,41,972 crore in 2015-16, Rs 6,86,750 crore in 2016-17. In December 2017, NPA reached Rs 7,77,280 crore. This goes to prove that nothing else happened except evaporation of capital pumped in by the Government into banks. In the case of 14 public sector banks, as per the fourth quarterly results ending March 2018, consolidated losses reached over Rs 50,000 crore.
One would surely be surprised that Mudra loans have been tied around the throat of the Modi Government like a bell. During the last week, while addressing beneficiaries through a video conference, the Prime Minister declared, "We have come out with the Mudra scheme for offering loans to small scale entrepreneurs. With this, the talent or skill of the common people have received an identity."
But does the Prime Minister know that by June 30, 2017, 39 lakh Mudra scheme accounts have turned into NPAs, whose amount works out to as much as Rs 11,317 crore? Hence, the actual position of the Mudra scheme is this stark reality, in contrast to the praise voiced by the PM. Even more shocking pronouncement than this has been made by the Reserve Bank of India, that during the course of the last five year, there were 23,000 fraud cases, resulting in the erosion of Rs 1 lakh crore from banks. The fraudsters include mega defaulters such as Neerav Modi, Mehul Choksi, Vijay Mallya etc.
In all these scams, names of top officers of banks, their CMDs, etc. have come to light. Looking at the overall scenario during the last four years, this is dismal. Let us hope that by the month of March 2019, the condition of banks would turn around for the better and they would get a new lease of life.
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*People's Union for Civil Liberties, Gujarat