The banking sector of India has entered in a danger zone with nonstop increase in bad loans. The Non-Performing Assets (N.P.A) in banks have reached alarming proportion and exceeded Rs. 15 lakh crores.
The Central Government has also accepted that there were 9063 wilful defaulters like Vijay Malaya and Nirav Modi etc. who together owe R. 1,10,050 crores to the banks. Such defaulters say that outstanding on their names are highly exaggerated.
Now it is also clear a such a huge loan the banks top executive who managed and sanctioned received heavy cut from the loan account but now entire money were shown as due on the loan recipients. There should deep probe into all the heavy loans defaults and how much cut as brive were taken by the bank offices and recovery should be made from them also.
After amending the Insolvency Act the action are taken on some defaulting concerns but recovery is not upto the expectation. It is also charged that still strict action against the defaulters are skirted and avoided. They are still offered one time settlement, interest wavers, compromise settlement, re-scheduling, restructuring and write off etc.
The Union Government has clearly fold the Government commercial bans that it should not accept on make habit of receiving government budgetary capital support for all the time. The banks should increase the deposits with it. But the banks have reduced the interest rates on saving account deposit and fixed deposits that people have shifted to other financial institutions.
The Reserve Bank have also asked the banks to encourage deposit and formulate down to earth plans to recover bad loans and N.P.A. The R.B.I. has given the time limit of 180 days to prepare recovery plans.
The 85 government commercial bank, private and foreign banks and LIC type financial institutions have formed consortium for recovery of bad loans are reduce the N.P.A. It have signed the Intercredit Agreement to cover the N.P.A. Under it the lead bank will prepared implement the recovery plan. The lead banks will be one who has given the maximum loans. The banks in the recovery process may change the period and interest rate.
In the agriculture sector the loan waiver and now waiving the irrigation and electricity charge have created such a mentality in the all sections of the society to take loans from financial institution and never pay it back.