India’s wilful defaulters owe more than Rs 1 lakh crore to banks

Beginning of a Massive Indian Currency Erosion – Suresh Kannan

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Beginning of a Massive Indian Currency Erosion

With the recent massive bank frauds coming to limelight in India, I believe that It is the beginning of a massive economic catastrophe in India. I have drafted the following to put things in right perspective so the people are better prepared. Senseful financial measures can avoid this. But I believe India had exhausted all the opportunities to fix this. The cycle of every currency system had to go through this erosion if the government, banking, and market/business behave irresponsible or abusive. I believe India has had all the three cases of abuse as so had to face the consequences.

Total Currency in Circulation(according to RBI website as of Feb, 2018): 17,663 Billion Rupees= 17663*1000*1000000=176634000000000. To cover this 1 lakh crore loss, the actual will be at least double as more and more default coverups will come to light soon); Say 2 lakh crore, ie, 2,00,000*100000000=20000000000000. The ratio is 20000000000000/176634000000000=11.3%. RBI will end up pumping/printing at least 11.3% more money to cover just the baking frauds. And with more government budget deficits; at least few more lakh crores will be printed. So, direct devaluation of money is at least 30%. i.e., your 100 Rupee will be actually 70 rupees without you tearing it off. But your expenses will stay same or go up.

With a raw simplified estimation for the purpose of high-level understanding, you are looking at spending 30% more on the living expenses. Say if you are making Rs.1,00,000 per month as salary and expenses are 80,000, you will end up spending 104,000 leaving negative cash of Rs.-4000. The banks lie that they have enough assets to cover. But in reality, the money will only come from printing more.

The fractional reserve system that allows them to lend 100s of times more than the deposits they get from citizens will allow them to print more exponential money into circulation. Very soon India may get into Super Inflation where the Rupee value will drop exponentially. Not necessarily against other currencies but lose its value to itself. Unless the GDP and productivity index can improve to match, there will be a vast erosion of middle class leading to a significant divide between Rich & Poor. I know there will be some economic gurus who were trained to think within the box will disagree with this view. But the numbers and history don’t lie unless manipulated.

Suresh Kannan

sureshkb@digiblitz.com

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India’s wilful defaulters owe more than Rs 1 lakh crore to banks

NEW DELHI: As on September 30, 2017, more than Rs 1.1 lakh crore was owed to banks by people or companies characterised as “wilful defaulters”, that is those who are unwilling to pay despite having the capacity to do so. TOI analysed more than 9,000 such accounts for which banks have filed lawsuits for recovery and found that the top 11 debtor groups, each with dues of over Rs 1,000 crore, together had over Rs 26,000 crore outstanding to the banks.India’s wilful defaulters owe more than Rs 1 lakh crore to banks

Analysis of the publically available data for suit-filed accounts (wilful defaulters) of Rs 25 lakh and above shows that Jatin Mehta-promoted Winsome Diamonds & Jewellery Ltd and Forever Precious Jewellery & Diamonds Ltd owed close to Rs 5,500 crore to various banks. Mehta is reported to be now a citizen of St Kitts and Nevis, a tax haven with which India doesn’t have an extradition treaty.

Mehta’s companies are followed by Vijay Mallya’s Kingfisher Airlines, which has to pay back over Rs 3,000 crore under this head. The third company in the list is Kolkata-based REI Agro, a company owned by Sandip Jhunjhunwala, which, according to news reports, was once listed in London and Singapore stock exchanges and was co-sponsor of an IPL team. This company owes Rs 2,730 crore. Next in the list are the companies owned by Prabodh Kumar Tewari and his family members. The amount outstanding on Mahuaa Media, Pearl Studio Pvt. Ltd, Century Communication and Pixion Media Pvt Ltd is Rs 2,416 crore.India’s wilful defaulters owe more than Rs 1 lakh crore to banks

The other companies that owe more than Rs 2,000 crore and are unwilling to pay despite having the means, according to the banks, are Zoom Developers Pvt Ltd promoted by Vijay Choudhary, Reid & Taylor (India) Limited & S Kumars Nationwide Limited, both promoted by Nitin Kasliwal, and media baron T Venkatram Reddy’s Deccan Chronicle Holdings Limited.

The data shows the alarming rate at which these bad loans are growing. In the past one year it has increased by about 27%. In the previous three years, it had increased by 38%, 67% and 35%, respectively. Thus, between September 2013 and September 2017, the amount has quadrupled from Rs 28,417 crore to over Rs 1.1 lakh crore. While some of this would be due to interest being added each year, the quantum of the increase is too large to be entirely or even mainly due to that.

 

 

 

 

India’s wilful defaulters owe more than Rs 1 lakh crore to banks

RBI defines “wilful default” as defaults done despite the borrowers’ paying capacity. Money diverted for purposes other than the specific purpose of finance, or siphoned off and hence not available as assets to the borrower also qualifies as wilful default. Borrowers who have sold fixed assets that they provided as collateral to secure the loan without informing the bank also come under this category.

The cumulative total of more than 50 companies or groups each with over Rs 250 crore of wilful default works out to about Rs 48,000 crore. To put that in perspective, it is only slightly less than the government’s allocation of Rs 52,800 crore for health in the 2018-19 Budget.

Bank-wise analysis of the data shows that nationalised banks (excluding SBI and associates) constitute about 60% of this money. SBI and its associates account for one-fourth of the total. Private sector banks have also declared over Rs 14,000 crore as wilful defaults.


Representative image
Representative image

NEW DELHI: As on September 30, 2017, more than Rs 1.1 lakh crore was owed to banks by people or companies characterised as “wilful defaulters”, that is those who are unwilling to pay despite having the capacity to do so. TOI analysed more than 9,000 such accounts for which banks have filed lawsuits for recovery and found that the top 11 debtor groups, each with dues of over Rs 1,000 crore, together had over Rs 26,000 crore outstanding to the banks.

Analysis of the publically available data for suit-filed accounts (wilful defaulters) of Rs 25 lakh and above shows that Jatin Mehta-promoted Winsome Diamonds & Jewellery Ltd and Forever Precious Jewellery & Diamonds Ltd owed close to Rs 5,500 crore to various banks. Mehta is reported to be now a citizen of St Kitts and Nevis, a tax haven with which India doesn’t have an extradition treaty.

def

Mehta’s companies are followed by Vijay Mallya’s Kingfisher Airlines, which has to pay back over Rs 3,000 crore under this head. The third company in the list is Kolkata-based REI Agro, a company owned by Sandip Jhunjhunwala, which, according to news reports, was once listed in London and Singapore stock exchanges and was co-sponsor of an IPL team. This company owes Rs 2,730 crore. Next in the list are the companies owned by Prabodh Kumar Tewari and his family members. The amount outstanding on Mahuaa Media, Pearl Studio Pvt. Ltd, Century Communication and Pixion Media Pvt Ltd is Rs 2,416 crore.

The other companies that owe more than Rs 2,000 crore and are unwilling to pay despite having the means, according to the banks, are Zoom Developers Pvt Ltd promoted by Vijay Choudhary, Reid & Taylor (India) Limited & S Kumars Nationwide Limited, both promoted by Nitin Kasliwal, and media baron T Venkatram Reddy’s Deccan Chronicle Holdings Limited.

The data shows the alarming rate at which these bad loans are growing. In the past one year it has increased by about 27%. In the previous three years, it had increased by 38%, 67% and 35%, respectively. Thus, between September 2013 and September 2017, the amount has quadrupled from Rs 28,417 crore to over Rs 1.1 lakh crore. While some of this would be due to interest being added each year, the quantum of the increase is too large to be entirely or even mainly due to that.

def

RBI defines “wilful default” as defaults done despite the borrowers’ paying capacity. Money diverted for purposes other than the specific purpose of finance, or siphoned off and hence not available as assets to the borrower also qualifies as wilful default. Borrowers who have sold fixed assets that they provided as collateral to secure the loan without informing the bank also come under this category.

The cumulative total of more than 50 companies or groups each with over Rs 250 crore of wilful default works out to about Rs 48,000 crore. To put that in perspective, it is only slightly less than the government’s allocation of Rs 52,800 crore for health in the 2018-19 Budget.

Bank-wise analysis of the data shows that nationalised banks (excluding SBI and associates) constitute about 60% of this money. SBI and its associates account for one-fourth of the total. Private sector banks have also declared over Rs 14,000 crore as wilful defaults.

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