A WELL ORGANISED LOOT

The Big news all over, apar from the Delta + variant was that of recovering money from the scamsters. The Enforcement Directorate (ED) said that it has managed to recover 40% of the money lost by banks in frauds perpetrated by the terrible trio – Vijay Mallya, Nirav Modi and Mehul Choksi.

The trio defrauded the banks to the tune of Rs.22,000 crore and the recovery currently stands at around Rs.9100 crore – 40%. And we are to feel good about this. Of this Rs.9100 crore, over Rs.5800 crore is via sale of shares of United Breweries.

And just a couple of days ago, Reliance Home Finance, another debt ridden ADAG company, got its resolution plan finalized after Authum Infrastructure and Investment won the bid. Here, the total debt stands at Rs.11,200 crore and the lenders are getting Rs.2887 of which 90% will come now and balance 10%, which is Rs.300 crore, will be repaid within a year. Here, the banks have taken a hair cut of 60%.

The case of Videocon is even worse off.  14 of the 35 bankers agreed to a resolution plan which accounts for only 4.15% of the total outstanding claim and a total haircut of 95.85%. As against the claims of around Rs.65,000 crore, the banks actually agreed to accept Rs.2962 crore.

Siva Industries is also a similar story -  banks will get only 6.5% of the total debt of Rs 4,863 crore from the settlement offer made by C Sivasankaran, promoter of Siva Industries. Sivasankaran has offered to pay only Rs 5 crore upfront and the balance within 180 days of approval. This means a huge haircut of 94% for the banks. Once NCLT gives its nod, the promoters actually get back the company.

So these promoters take huge loans, declare bankruptcy while nothing in their  personal life quality changes; then the banks agree for huge haircuts. The promoter gets back his company by repaying less than 10% of the total debt while banks deal with the huge NPAs.

Whose money are these banks squandering away? Ours, of course! If these were coming their personal coffers, do you think the bankers would have agreed to such huge haircuts? These banks, 99% of them are public sector banks, which is probably why they vote unanimously for any resolution.

Top industrialist, Harsh Goenka, rightly tweeted to the PMO’s office - "Promoters stash away money on the side, take the company to the cleaners, get an 80-90% haircut from bankers/NCLT - that's the new game in town."

What exactly is the NCLT doing? After these instances, the growing perception is that the NCLT is doing really nothing to recover money from the promoter. This is public loot by promoter. Even a 0.5% hair cut is allowed for an honest home loaner but if they fail to pay even one EMI, their home or car is confiscated while fraudsters in suit and boot rob us all big time.

So powerful are the nexus between cronies and politicians that banks feel lucky to retrieve even five percent of their exposure!

The aim behind the formation of the NCLT was to recover maximum money from defaulters but the reality is different. Government should rethink about this!