Following is the latest liberal treatment to loanees
on the eve of election
The Union Finance Minister Shri P. Chidambaram has announced a Moratorium period for all education loans taken-up to 31.3.2009 and outstanding on 31.12.2013. Government will take over the liability for outstanding interest as on 31.12.2013, but the borrower would have to pay interest for the period after 1.1.2014. Nearly 9 lakh students borrowers will benefit to the tune of approximately Rs2,600 crore. Presenting the Interim Budget in the LokSabha today, the Union Finance Minister ShriChidambaram said that a sum of Rs 2,600 crore will be provided in the current financial year itself and this amount will be transferred to the Canara Bank. Mr. P. Chidambaram said that the Central scheme for interest subsidy was introduced in 2009-10 in respect of education loans disbursed after 1.4.2009. However, students who had borrowed before 31.3.2009 struggled to pay interest during the period of study and they deserved some relief. Shri P. Chidambaram informed that ten years ago, only a few thousand students- mostly the well-connected- got education loans. At the end of December 2013, Public Sector Banks had 25,70,254 student loan accounts and the amount outstanding was Rs. 57,700 crore. ***
My Views are As below on culture of organizing loan camp and culture of announcement of various waiver of loan schemes or subsidies for borrowers of public sector banks on the eve of election political gain
My Views are As below on culture of organizing loan camp and culture of announcement of various waiver of loan schemes or subsidies for borrowers of public sector banks on the eve of election political gain
Below is the news which speaks how politicians from time to time have polluted repayment culture in banks to enhance their vote banks area and how as a consequence borrowers of Indian public sector banks are motivated to delay repayment of their loans and wait for waiver scheme .
Waiver culture started from the reign of Devi Lal in the state of Harayana and that of Mr. V. P Singh as Prime Minister of India . Since then Finance Minister under the rule of Congress Party have announced many loan waiver schemes or schemes for compromise with defaulters or scheme of restructure of bad loans to reduce NPA and to reduce Provisioning so that profits of all banks may be booted up .
To add fuel to fire , politicians and under their pressure , management of all these public sector banks use to conduct loan melas called as Credit camp to disburse loans under various schemes. Such type of pressure oriented loaning definitely affects the quality of loans and ultimately results in rise in bad debts.Loan Mela culture in banks was also started by politician like Janardan Pujari in eighties which motivated bank officers to compromise with quality of loan processing but promoted them to achieve the target by hook or by crook to win the hearts of their bosses and to get fast promotions and their choice posting .
Now these banks and staff of these public sector banks are reaping the sour fruit of bad culture and bad sowing.United Bank of India is the latest example and very soon other bigger banks will also fall in line and then only bank staff will realize how politicians have exploited them for their vested interest and how and why they are denying respectful wage hike.
PSU banks get R11,200 crore to shore up Tier-I capital-The Indian Express-18.02.2014
Non-performing assets (NPAs) of public sector banks rose 28.5 per cent to Rs 2.36 lakh crore in September last year, from Rs 1.83 lakh crore in March 2013.
Public sector banks have been allocated Rs 11,200 crore for capital infusion as equity in FY15 in the Interim Budget but finance minister P Chidambaram stressed the lenders should depend more on internal resources such as net profits.
“I am signaling that it is good corporate and business practice to raise your own capital. Unlike other industries, banking requires capital every year and banks should put aside a part of their net profits,” Chidambaram told reporters at the post-Budget press conference on Monday.
The finance ministry had also promised state-owned lenders additional capital infusion for cheaper loans on consumer durables and automobiles. But the Centre’s capital support to state-owned lenders has declined over the last few years. The allocation in the Interim Budget 2014-15 for bank recapitalisation is lower than the Rs 14,000 crore in the current fiscal and the Rs 15,000 crore in 2012-13.
However, the country’s largest lender State Bank of India raised concerns over the allocation and said it may not be sufficient given the systemic credit growth and migration to the capital-intensive Basel-III framework.
“The proposed provision of Rs 11,200 crore for capital infusion in public sector banks may not be sufficient,” State Bank of India chief economic adviser Soumya Kanti Ghosh said in a note.
In view of the Basel III, or global prudential banking norms, all banks have been planning to shore up their Tier 1 capital despite facing rising bad loans on their bank accounts. “The provision for recapitalisation of the public sector banks will provide the risk capital given the current level of stress as well as provide good buffer for growth capital for the industry as a whole,” said Monish Shah, Senior Director, Deloitte (India).
Non-performing assets (NPAs) of public sector banks rose 28.5 per cent to Rs 2.36 lakh crore in September last year, from Rs 1.83 lakh crore in March 2013.
However, finance minister P Chidambaram that as the economy turns around, banks will be able to contain the NPAs.
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