CHARGE 1: DEMONITISATION FAILED TO MEET OBJECTIVES
- The stated objectives of demonetisation were – unearthing black-money, stopping terror funding, abolishing corruption and checking counterfeit currencies – but in turn, the exercise not only served to impose unaccountable miseries on people but failed to achieve any objective as there is no evidence that the purpose of demonetisation was ever met.
- The only sector to benefitted from this are the Fintech companies. The Parliamentary Standing Committee on Finance could not complete its enquiry because BJP MPs stalled the process.
CHARGE 2: LACK OF CONCRETE STEPS TO RESOLLVE NPA CRISIS
- The Indian banking industry is the piling of Non-Performing Assets (NPAs) worth over 10 lakh crores, which have accumulated on account of faulty lending practices, which favoured Corporates.
- Under the Modi regime, NPA write-offs have been almost eight times higher than under the UPA-II. Consequently, banks have had to budget for higher NPAs which has led to massive financial losses
- Instead of timely and stringent actions on the defaulters, the RBI and the government policies have focused on tightening the banks. Restructuring policies and introducing Insolvency and Bankruptcy Code (IBC) have resulted in the merger of banks and attempts to privatise banks which have been detrimental to the banks and helped the defaulters.
- 80% of the defaulters borrowed more than Rs. 5 crore. Of these, the top 100 account for over 20% of the total NPAs.
CHARGE 3: LACK OF POLITICAL WILL TO ACT AGAINST WILFUL DEFAULTERS
- More than 82 per cent of the NPAs are due to corporate defaulters. One third of that belongs to just 40 Corporates. The government and the RBI have not released the name of the wilful defaulters, nor has there been any actions against them.
- Under the NDA government there has been an exponential increase in bank frauds (Nirav Modi, Mehul Choksi etc.) which have increased from Rs. 23,900 crores in 2016-’17 to Rs. 41,100 crores in 2017-’18. Rs. 1.33 lakh crores have been looted by fraudsters. Of this, Rs.1.2 lakh crores were looted from public sector banks.
CHARGE 4: NDA WEAKEND THE RBI AND PUBLIC SECTOR BANKING SYSTEM
- The current government has systematically interfered with the autonomy of the RBI and has jeopardised its independence. Using its Board as a rubber stamp to legitimise demonetisation and the appointment of RSS ideologues at its Board are examples of this.
- The political interference in the functioning of public sector banks (PSBs) has promoted crony capitalism and corruption which has resulted in mounting non-performing assets (NPAs) and the political patronage for certain corporations crippled banks’ will to recover money from the defaulters.
- In the history of Indian Banking, depositors of PSB have never been under such tremendous pressure like the last four years. With policies like demonetisation that resulted in a country wide chaos, the FRDI Bill that sent panic that depositors might lose their savings, the increased and huge charges on banking transaction and the eminent threat of bank privatisation has all contributed to many even closing accounts with PSBs.
CHARGE 5: LACK OF TRANSPARENCY AND ACCOUNTABILITY:
- Absence of transparency and accountability at all levels of appointments and decision making has been fundamental to the increase of crony capitalism, corruption, under performance, loss making and increase in social and environmental costs that are caused by irresponsible investments.
- There are many Fintech companies without supervisory mechanism or licences that are into lending which is a banking activity.
CHARGE 6: NO ACTION FOR APPOINTMENT OF EMPLOYEE/ OFFICER DIRECTOR:
- The board of the banks make decisions regarding large scale loans. However, the posts of the employee director at the PSBs have intentionally been left vacant as part of the strategy of this government to prevented dissenting voices at the Board.
CHARGE 7: GOVERNMENT PURSUING A WEAK BANK MERGER PLAN
- The government says its plan to merge one weak bank with two stronger banks will help to mitigate the burden of bad loans and further increase the lending capacity of the amalgamated entity. The merger may help clean up bad loans of the weak bank. However, the new bank lending to the same large borrowers, without recovering existing bad loans will only result in more loss for the bank. This is not just commercially unviable, but a three-way merger among banks with different administration will only result in an administrative chaos.
CHARGE 8: PUSHING PRIVATISATION AS THE PANACEA FOR ALL THAT AILS PSBs
- Public Sector Banks have been the driving factor of Indian economy since the nationalisation of banks in 1969. While private banks are confined to urban areas, with no branches or nearly no services in rural areas, PSBs serve one and all. Policy changes and political interference in the recent years have weakened and made them vulnerable, mounted the burden of non-performing assets and ended up charging for their services, hitting the poor the most. These are weakening the PSBs and steps like bank mergers are steps towards privatisation of PSBs and it should be vehemently opposed.