Banks heading for losses by writing off loans to settle NPA accounts: Jindal

Tribune News Service

Ludhiana, March 19

The Federation of Punjab Small Industries Association (FOPSIA) is in the process of filing a PIL in the Supreme Court as banks are doing huge write-offs to settle the issues and are incurring huge losses.

Badish Jindal, President FOPSIA, said in Punjab alone, the banks were writing-off more than Rs 30,000 crores. Out of this huge sum, there were NPAs to the tune of Rs 13,000 crores in Ludhiana alone.

As per data available with FOPSIA, the gross NPA ratio of the nationalised banks stand at 14.7 per cent which means that around 14 lakh crores of nationalised banks were under threat, whereas the gross NPA of private sector banks stands at 4.7 per cent.

“Similarly, as per investigations, the 94 per cent frauds occurred in nationalised banks whereas the private sector banks accounted for merely 6 per cent of total frauds amounting to more than Rs 50 crores. Now the banks are settling the large NPAs by merely charging 19 per cent of the principal amount,” said Jindal.

He further added that when it comes to accounting, the large companies are repaying merely 12 per cent to 14 per cent of their total out- standing amount. This year the bankwrote off more than 3 lakh crore of bank loans which means that by the end of the year, the total write off of the banks may cross 8 lakh crore.

In Ludhiana, many large companies are settling their accounts. A few companies in Ludhiana whose total outstanding was more than Rs 13,000 crores, have got success in settling their accounts in less than Rs 2,000 crores, which means there are huge losses to the nationalised banks.

There is a clear provision under the act and according to the provisions of Section 120B of the Indian Penal Code, 1860, whoever is a party to a criminal conspiracy shall be imprisoned for a term not exceeding six months, or with fine or both. But to save their skins, banks are in process of settling the NPAs at throw away prices.

“FOPSIA is gathering the data of transferring of funds to other countries by many companies. Besides, many such companies have transferred huge funds to Dubai and other countries. Even after the instructions of the finance ministry to refer the cases above Rs 50 crores to CBI, the banks are settling their accounts without any intimation to CBI,” he said.

“The banks are not ready to provide the data of NPA accounts for the vested interests. Big frauds are involved in such settlements and higher officials of banks are charging handsome amounts to settle the cases with the help of leading, reputed advocates,”said Jindal.