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Sunday, June 18, 2017

The NPA Resolution!!! A Big Sham Against The Nation, The Taxpayers and Especially The Farmers?

What is the NPA resolution?
The government of India has amended the RBI Act, to give RBI the power to direct banks to take action against the loan defaulters under the code called Insolvency and Bankruptcy Code (IBC). According to amendment the lending banks approach the National Company Law Tribunal (NCLT) to appoint a professional to manage a defaulting company despite the existing board has been suspended. The professional has to find out a solution within 180 days to repay bank loans. If the professional is not able to find a solution within 180 days, the process timeline would get extended by another 90 days. If a solution could not be found within max 270 days, the company would go into liquidation.   

The total bad debts in the Indian Banking System identified and reported so far are worth
                                              Rs.7.11 LAKH CRORES!!!
One cannot imagine the amount of loans not yet identified or for that matter reported as NPAs. Given the history of corrupt and unscrupulous bankers, one should not rule out this possibility and should always be cautions with the numbers which are published. To add more fuel to this fire it has been reported that number of NPAs with every passing day is going higher and higher, worsening the situation with every passing day. The government has already delayed more than 2 years to come out with any sort of solution to put this mess in the grave. Meanwhile, during the past two years the Government has already infused Rs. 50,000/- crores; as a part of the capitalization program? Whose money it is, I ask. Does the government earn any money? NO!!!! Then on what basis the Government of India has decided to save these brat bankers. The government has promised Rs. 70,000/- crores in total to the Indian Banks , that means another Rs. 20,000/- crores will be deployed by the end of 2018-19. Although the number Rs. 70,000/- crores looks less in comparison to Rs. 7.11 lakh crores, one must remember that the Banking system has the ability to create or generate an investment of minimum 10 times with the deposit what they receive, because of reserve ratios – lending ability – and withdrawals (demand on the deposits). May be the government’s attempt was to create this sort of huge investments and value in the economy with the infusion of Rs. 70,000/- crores has clearly been failed? Instead of value being created, what this system has created is more NPAs. What should have acted as a medicine has became a poison in this slowing down economy. It is an another indication of the economy being slowed down and so is the demand for credit. The defaults on credit are on the high and rising. (you may read my article: about the  published on 08th of June).

Before the failure could become obvious to everyone, probably it is wise to trigger the so called NPA resolution and give it a popularity through the media.

Also there are some loopholes and if-then situations in this resolution process. Although, the maximum of 270 days deadline has been set for this resolution process before the company goes into liquidation, a promoter of the company has a right to move the High Court on various grounds, delaying the process to find resolution or liquidation. Another possibility is how many of those professional appointed by the NCLT would be able to understand the business of the company in the time period of 270 days to come out with the workable, making liquidation more certain, but only further delayed process. Even if one finds the resolution

The Finance Minister Mr. Arun Jaitley had announced capital infusion of Rs. 10,000/- crores for the current financial year in line with the Indradhanush scheme. I wonder why such Indradhanush does not shine for the Farmers of India? Why only for the irresponsible Bankers and the Industrialists?

When the topic of Farmers’ loan waivers was hot in media, a famous Banker said waiving of Farmers’ loan would encourage indiscipline in farmers. So does it mean discipline has to be followed by the Farmers and the poor and middle class people in the society? What about Bankers and the Industrialists? These bankers are acting like bloody street dogs who are eating the bread of the society and barking and biting back the society. Was it not the duty of Bankers to ensure that the loans were granted to the companies which are financially disciplined? The 12 defaulters listed by the government to undergo new IBC code have defaulted to the extent of 1.78 Lakh Crores. In short only 12 companies with these Banker’s help have managed to fool the economy by 1.78 Lakh Crores.

The government of India is instead of punishing these bankers, supporting them. This government is also promoting it’s governance of the country by the performance of the stock market. How many Indians are actually benefitted by this performance of the stock market? While economy is slowed down, let’s think of people who have invested money in mutual funds where so called professional managers are managing the public money. The NIFTY has moved 2500 points up from 7000 in Feb 2016 to 9500 on today’s date? i.e. 35.71% return on the people who invested in the Index in Feb 2016. How many Mutual Funds Schemes have actually provided return = 35%. It is the best way to measure the performance of one’s Mutual Funds investment. If not 35%, how many Mutual Funds have provided return of at least 25% during the last year or two years for that matter? If not, poor and simple people of this nation are getting dragged in the so called financial bubble in the economy. Once again I would like to re-iterate that the People of India should really save their money which are not accessible to the corrupt bankers or the financial service providers such as mutual funds. ( You can read my article

Also read my article about unethical practices in the Indian Stock market. How, the so called sharks are making money by looting Indian Traders and Investors.

1 comment:

  1. Happy to see BJP has waived off farmer's loan in the states of UP and Maharashtra. And Congress did likewise in the state of Karnataka.