Civil society body says banks took 'colossal haircuts' while resolving bad loans, seeks probe

Kolkata: A civil society forum has written to Chief Justice of India DY Chandrachud, urging him to initiate a suo motu judicial probe into the financial resolutions of bad loans involving massive haircuts taken by the banking system. The forum - Bank Bachao Desh Bachao Manch- said the Supreme Court should initiate a probe into every such resolution in which "colossal haircuts" are involved.

Banks have written off Rs 2.09 lakh cr during last FY: RTI

According to information obtained through RTI queries, the Indian banks had written off Rs 2.09 lakh crore during the last financial year, said the letter written by joint convenors of the forum Biswaranjan Ray and Soumya Datta. "We are of the considered opinion that the humongous write-off of bad loans is tantamount to loot of the national exchequer by corporate wilful defaulters," the forum maintained.

It also alleged that the banks have also been taking 65-70 percent haircuts through NCLAT/IBC resolutions, causing danger to the financial health of the banking system as a whole.

'Bad loan resolution system has 'failed miserably''

Claiming that the bad loan resolution system has "failed miserably", the forum in the letter said, "We apprehend that there is a bigger canvas where both wilful defaulters and the entity which is buying the assets are beneficiaries of a systemic design to loot the national exchequer for the benefit of corporate houses."

While the defaulting borrowers "get away" without repaying debts, the buyers get access to the assets at "a dirt-cheap price", the forum said. It also opposed the idea of privatisation of nationalised banks.

(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Google News. Click here to follow. Also, join PSU Watch Channel in your Telegram. You may also follow us on Twitter here and stay updated.)