Donors Of Political Parties Have Piled Up Huge Debt At The Cost Of Public Sector Banks

The Logical Indian

May 7th, 2016

Image Courtesy: india dalaltimes

Yesterday a JD (U) member of the parliament made a detailed speech on the money corporates owe the public sector banks. Mind you, Public sector banks not only has deposits of people, it is also re-financed occasionally with tax payers money. Any loss the PSU makes, the tax payer eventually shares the burden.  So what do the numbers say?
1.) The PSU has lent 5 lakh crores to the corporates while 1.4 lakh crores to 5 companies alone including that Adani Group and Suzlon Energy
2.) State Bank Of India has reported a huge slump in the profits (more than 60%) in the back drop of Rs 20,000 crores of bad loans
3.) The gross NPA (NonPerforming Assets) plus standard restructured advances, as a percentage of advances moved up to 11.3 per cent as on September 2015 as compared to 9.2 percent in March 2013.
4.) The debt value of Adani Group alone is Rs 72,000 crores which equal the debt burden of all the farmers in India.

Bank – Politician – Business Matrix

 Businessmen contribute handsomely to election campaigns of various political parties, the political parties inturn repay the faith by using their clout in forcing the Public Sector Banks where the government has majority stakes in asked to lend to the very generous donors who contributed to the campaign. It is not doom and gloom until this point, at the end of the banks job is to lend money to businesses. Businessmen who are close to the ruling political class have never taken seriously to return the money they borrowed to public sector banks. Two reasons precisely for that
1.) The businessmen, when they don’t return the money, are usually made to go through a debt restructuring plan which would involve a generous reduction in interest rates or equity in the assets acquired from the borrowed money among other options.
2.) The government with its majority stakes in Public sector banks have to re-finance the banks if in the case of a downturn in fortunes of the PSB’s. Refinancing of Banks incase of poor performance happens from tax payers money.

Need of the hour

1.) The structure of businesses financing political parties for their campaigns should come to an end. The campaign funding and spending are where the crux of the problem is. The election commission should create a common platform where political parties can showcase their ideas for a nation. Campaign funding is where corruption seems to begin.
2.) Independent RBI – The incumbent governor Raghuram Rajan is on the dot in asking the Banks to balance their books and reduce their NPA’s so that there are growth and profits for banks in the medium term and long term. An independent RBI has been the last line of defense for a poor monetary policy. And this independence of the institution is to be maintained if not strengthened.

The Logical Indian seeks Election Commission’s and Judiciary’s intervention in breaking the Bank – Politician – Businessmen matrix by bringing about drastic electoral reforms. We request the Public sector banks to lend wisely and give high priority to lend to the poor, farmers and help them in making their way up in the economic ladder for a better life.

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