Supreme Court ruling on e-records is a timely reminder for banks -Hindu Business Line-22.11.2014By
Thiruvananthapuram, November 21:
Loan recast hides stress in banks
Data collated by the finance ministry for a meeting of bank chiefs on Thursday reveals that in case of at least five state-run lenders, the ratio of assets which have turned non-performing or have been restructured is as high as one-fifth of their loan book.
By restructuring debt — through conversion into equity, extension of repayment period and other changes —banks have managed to ensure that these loans don't turn sticky. For instance, in case of Dabhol Power, banks have converted a part of their loans into equity and deferred immediate provisioning to report healthier finances although the company is not earning any revenue and therefore unable to pay installments.
The prolonged economic slowdown has resulted in companies facing earning pressure, resulting in loan defaults. Among the various sectors, SMEs are at the top of the heap with 7.2% of the loans turning NPA, followed by large corporates at 5.55%. Despite the perceived stress, real estate is performing better with 1.8% of the loans turning sticky.
At 14.2% of the loans, the highest level of NPA is in the gems and jewellery space, where export demand has been hit by the slowdown in the US and Europe. Then come coal, a sector which is in the grip of controversy, and cement, which has been hit by excess capacity.
The ED has frozen five bank accounts of Bose, of which three are personal and two are that of the company's. It has also begun the process of attaching Samvad Pratidin, the Bengali daily owned by Srinjoy Bose.
The CBI has also summoned TMC MP Hasaan Ahmed Imran for questioning in the case.
Under fire, the TMC has called CBI "political manipulated". Speaking to CNN-IBN, party MP Sougata Roy lashed out at the CBI as he said, "Srinjoy Bose's arrest is unfortunate, CBI is politically manipulated. TMC as a party remains strong."
Party chief Mamata Banerjee has demanded the arrest of the guilty. She said, "Why is the CBI not catching the real culprits of the Saradha scam? They should arrest those who are actually responsible of cheating poor people."
Another party MP Derek O' Brien tweeted, "The CBI is a political tool used by the previous government to settle political scores. Now the BJP is doing an action replay. They cannot combat the Trinamool politically. They have tried and failed. So what do they do? Let loose a discredited CBI."
The ED has also frozen two bank accounts held by painter Shubhaprasanna, a close aide of CM Mamata Banerjee. It has also frozen as many as 24 fixed deposits held by the painter. His possible involvement in the scam is under the scanner of the central probe agencies.
Bose's arrest comes on a day when another Trinamool leader Shyama Prasad Mukherjee was grilled by the CBI. West Bengal Transport Minister Madan Mitra was also asked to turn up for questioning but he didn't and checked himself into a Kolkata hospital.
Former Trinamool Congress MP Kunal Ghosh, one of the prime accused in the scam, attempted suicide in the Presidency prison in Kolkata last week demanding the arrest of the guilty.
Seven high profile arrests have been made in the case as of now. It includes Sudipta Sen, Debjani Mukherjee, ex-TMC MP Kunal Ghosh, ex-DGP,West Bengal, Rajat Majumdar, East Bengal Club official Debabrata Sarkar, Sadanand Gogoi who is a singer from Assam and businessman Sajjan Agarwal, other than Srinjoy Bose.
Mamata Banerjee had earlier in the month claimed that nobody from her party had taken money from chit fund-aided companies, and hit out at a section of the media for showing Trinamool leaders as "thieves".