A bulk of the public sector bank non-performing assets (NPAs), which is under the Central Bureau of Investigation scrutiny for suspected wilful misappropriation of public money running into thousands of crores, is on account of debt repayment defaults by 30 corporate majors, said CBI Director Ranjit Sinha here on Wednesday.
The CBI, which is learnt to have come across irregularities in certain cases, is soon expected to register a preliminary enquiry for further probe.
As first reported in the The Hindu last week, the CBI chief confirmed that an enquiry was initiated against some top business houses. “A bulk of the NPAs is from the top 30 accounts, which is learnt to be running into thousands of crores. The CBI has already initiated enquiries against some of the big defaulter accounts and it is here that I seek cooperation from the Chief Vigilance Officers of banks concerned to play a proactive role in checking the losses to the exchequer and public money,” said Mr. Sinha at the fifth annual conference of CVOs of Public Sector Banks and Financial Institutions and Officers.
Mr. Sinha said that according to government estimates, the gross NPAs rose substantially from Rs.59,924 crore in 2010 to Rs.1,17,262 crore in 2012.
“At times, there appears to be reluctance on the part of banks to declare bad accounts as frauds despite there being clear-cut manifestations. There is need to realise that the delay in reporting of a fraud will adversely affect the tracking and recovery of proceeds of crime. Another issue is the fixing of accountability of staff and there are often differences of opinion between the CBI and banks regarding the role of public servants,” he said adding that there should be no reason for denial of sanction for prosecution wherever mala fide acts by delinquent officials caused huge losses to the bank.
Escape route of defaulters
Top CBI officials said the agency’s banking probe unit has also scrutinised cases of loan restructuring, a common route taken by the defaulters to escape immediate loan repayments. As the probe advances, the investigating agency would also probe the suspected complicity of bank officials in question.
Sometime ago, Reserve Bank of India Deputy Governor K.C. Chakrabarty had in a full paper on corporate debt restructuring quoted statistics, revealing that the restructured advances ratio to gross advances had gone up from 4.87 per cent in March 2009 (a year after financial crisis peaked) to 8.24 per cent in March 2012. By the 2012-13 financial year-end, it shot up to 10 per cent.
Today, the estimated gross outstanding advances are pegged at Rs.50 lakh crore, putting the restructured debt figure at roughly Rs.5 lakh crore compared to Rs.2 lakh crore as recorded four years ago.
According to an RBI analysis, CBI officials said, the number of fraud cases had shown a decreasing trend from 24,791 cases in 2009-10 to 13,293 cases in 2012-13.
Emphasising the importance of in-house vigilance, C. Rangarajan, Chairman Economic Advisory Council to the Prime Minister said both preventive vigilance and punitive vigilance were very important factors in maintaining discipline in the banking and financial sector. Those who violated procedures and rules must be appropriately punished.
