PARLIAMENTARY Panel Summons Officials of 4 PSU banks For No-Recovery Of Loans

February 23rd, 2017 | by Pranab Kumar Chakravarty

THE Public Accounts Committee Comprising Members of Parliament has summoned senior officials of the state owned Indian Bank, Indian Overseas Bank, Allahabad Bank and UCO Bank to appraise it of the reasons for their alleged failure to recover loans and action being taken against the defaulters. Quoting informed source, The Business Standard reports The PAC is concerned over the non-payment of the huge loans over the years taken by corporate houses. It intends to know whether the prescribed rules and regulations were followed while sanctioning the loans. THE PAC headed by senior Parliamentarian belonging to the Congress K V Thomas is keen to find out the basis on which such “favours” were extended. The panel will further probe if the loan amount has been diverted by the defaulters for projects other than what they told the banks, reports The Business Standard.

With banks not forthcoming in parting with information about the big defaulters, the PAC has decided to go beyond the national capital and meet the bank officials in Chennai and Kolkata. As Indian Bank and Indian Overseas Bank are headquartered in Chennai, the officials will appear before the PAC in the Tamil Nadu capital on February 27. The Allahabad Bank and the UCO Bank’s headquarters are located at Kolkata .The Panel will therefore meet in the metropolis on March 1.  Officials of the finance ministry will also be present at the two meets. Sources said the PAC, which usually reviews the reports of the Comptroller and Auditor General of India presented to parliament, has identified bad debts or NPAs of public sector banks as a major task before it. The Chennai and the Kolkata visits mark the beginning of a sustained effort by the panel to address the issue, said the sources. Banking sector sources say the NPA problem of the four is alarming.

As on December 31, 2016, the Indian Bank had gross NPA of 7.69% and net NPA of 4.76%, Indian Overseas Bank had gross NPA of 22.42% and net NPA of 14.32%, Allahabad Bank had gross NPA of 12.51% and net NPA of 8.65% and UCO Bank had gross NPA of 17.18% and net NPA of 8.99%.When some members pointed out that NPAs of the public sector banks had risen to 12%, the financial services secretary replied that this was due to bad debt getting properly defined and now showing in the books.TMC Member Sukhendu Shekhar Roy has expressed concern that while non-performing assets of corporates seldom find mention in public, the debt of common man is disclosed easily. After the Economic Survey 2016-17 suggested the establishment of a “bad bank” to deal with the NPAs, Finance Minister Arun Jaitley said it could be a possible solution to deal with the festering problem.

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