Eclipse of bad debts

 Bank Nationalization Anniversary

Be it a green revolution or a white revolution, public sector banks have become a source of development for the country. While more than twenty-five banks were in financial trouble, public sector banks worked to save them. Socially conscious with profit, these banks provided banking services in villages. July 19, 2021 marks the 52nd anniversary of bank nationalization. 

The government is likely to table a proposal to amend the law in the block assembly session starting on the same day as the anniversary of nationalization. The government argues that for the last three years, many public sector banks have been running at a loss and have run out of capital. In order to comply with the regulatory directives on capital adequacy funding, the government has had to provide capital to these banks by allocating Rs 4 lakh crore in the last five years and this is not always possible for the government. This is because the widening budget deficit increases the risk to the government at the international level, increasing the risk to the Indian multinational company as a result of declining ratings. Pure) On economic criteria, on the quality test, this argument is plausible, but the question arises as to why the public sector banks have incurred losses. So due to the provision that these banks have to make bad loans. According to the Reserve Bank, 55% of the loans disbursed by Indian banks go to large enterprises. 80% of them are in debt. All these banks were in working profit, but due to non-performing loans, these banks received Rs 1.60 lakh crore in 2016, Rs 1.68 lakh crore in 2017, Rs 2.41 lakh crore in 2018 and Rs 2.35 lakh crore in 2019; In 2020, the provision has to be made from operating profit of Rs 2.18 lakh crore, so these banks have incurred losses. As a solution to this, all the experiments done by the government failed. In 1991-92, new audit methods were introduced and all of a sudden Banks have run into losses due to bad loans. Recovered as a remedy to this Authority Act and Special Authorities came. In which over 10 lakh rupees Bank arrears cases were expected to be settled soon, but the authority has thousands of claims and lakhs of crores of rupees stuck. This was followed by the Suffrage Act which did not require recovery from the Revenue Department by issuing notices, but was expected to recover the arrears by auctioning the mortgaged property, but according to RBI figures, the recovery was negligible. After this, the government introduced bankruptcy law, but the amount owed to the banks by the arrears was Rs 4.42 lakh crore, of which the banks had to release Rs 2.79 lakh crore or 63% to recover Rs 1.62 lakh crore.

If there is a satisfactory recovery in a large overdue loan account, the banks will turn a profit. Then there will be no question of privatization, but as a solution, the government is trying to privatize public sector banks, and if so, who will own these banks? So this is the big industry or their brothers who ruined the banks to the tune of crores. Just as the banking system acts as a financial intermediary, so does the public sector banking system act as a vehicle for growth, not just for profit in the definition of numbers; It also works for social gain and that is why these banks have provided banking services in the village for the last five decades. Green revolution, white revolution has become possible. Small and medium enterprises got support. The savings of the common man came into the banking system, it became a source of development for the country. What about these social benefits? Should it be private sector banking that works for profit only or should it be banking that makes the common man financially viable and builds the country along with the profits? The Lok Sabha should consider this. With a majority from the current government, it is easily possible for the government to amend the law to privatize public sector banks, but what about the situation that arises from it? The government has not yet been able to implement agricultural laws. The Lok Sabha should realize that the people are the best in a democracy; We must also realize that otherwise the people will find their way!