As public sector banks continue in their struggle to keep the ship from sinking with non-performing assets shooting through the roof, it is the corporate houses that have emerged as the major culprit with fifty companies contributing to around 25 percent of the total NPA trouble of PSBs excluding State Bank of India.

The combined total NPA amount that has hurt the banks' financials stood at a whopping Rs 1,64,461 crore of which fifty corporate NPAs stood at Rs 40, 528 crore, according to a list released by the All India Bank Employees Association (AIBEA) on Thursday.  

Vijay Mallya’s Kingfisher Airline and Winsome Diamond owned by Jatin Mehta topped the list with bank liabilities of Rs 2,673 crore and Rs 2,660 crore respectively.

The other corporate defaulters in the AIBEA list include— Electrotherm India (Rs 2,211 crore), Zoom Developers (Rs 1,810 crore), Sterling Biotech (Rs 1,732 crore) and S Kumars Nationwide (Rs 1,692 crore) among others. Crisis-ridden Deccan Chronicle and the Delhi Airport Metro Express, which was being operated by the Reliance group till June this year, also figure in the list with debts of Rs 700 crore and Rs 346 crore respectively.

“We are witnessing looting of public money from the banks. On paper everything is perfect, but borrowers don't have the capacity to set up the project and repay the loan,” CH Venkatachalam, general secretary, AIBEA said. He further said that since the Reserve Bank of India (RBI) and the government remained tight-lipped on the list of defaulters, the association will soon come out with a compiled list of the top 30 defaulters in each bank.

While the present list does not include NPA accounts of the country’s largest lender State Bank of India, Venkatachalam said that on including SBI figures, corporate NPAs could up to as high as Rs 65,000 crore. The association will also be releasing the SBI’s bad loan figures in a couple of days, he said.

Calling for banks to reveal the names of defaulters on loans of Rs one crore and more, Venkatachalam said that wilful default of loans should be made a criminal offence. “There should be an investigation to probe the nexus and collusion while siphoning off bank money. The government should amend recovery laws to speed up recovery of bad loans,” he said.

Rubbishing the popular perception that the unchecked rise in bad loans were triggered by the global economic slowdown, the association said that RBI data clearly indicated that the present situation is due to poor administration in the banks.

In an earlier interview with Governance Now, RBI deputy governor K C Chakrabarty had said that NPAs were a reflection of administrative failure both in the banks and corporate houses.

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“For me, NPA stands for non-performing administration,” Chakrabarty had said. “As and when there is an administrative failure, where either the banks fail to undertake due diligence before making advances or the borrowers (especially corporate houses) overestimate their financials and go in for greater leverage (debt), loans are bound to turn bad.”

Pointing at the poor quality of governance mechanisms in certain PSBs, Chakrabarty had said, “We are concerned about the way the banks are managing their credit portfolios at the approval stage, monitoring and restructuring stage, and at the recovery stage. The governance capabilities, risk assessment capabilities and the ability to price risks are definitely inferior among the PSBs compared to their private sector counterparts.”