Recently when the Kingfisher Airlines owner Vijay Mallya, also a member of the Upper House, quietly left for UK on 2nd March instead of facing his creditors and the enforcement agencies, the Indian press and the social media expressed great outrage, echoes of which can still be heard. Mallya makes an easy target as an exceedingly colourful character known for his wild parties, his glamorous social circle and constant presence on page three. The outrage thus implied contempt for what was seen as a spendthrift’s and a debauch’s downfall, who only got his comeuppance. But the fact is that there is a long list of debtors and defaulters, wilful or otherwise who do not stand out like sore thumbs in the manner of Mallya. There are many stalwarts of Indian business and industry who are unable to service their interests, and will not be able to do so in the foreseeable future. According to a new report from local ratings agency India Ratings and Research, a third of the country's 500 largest listed non-financial companies failed to earn enough to make interest payments in the financial year that ended March 2015.
To take the sense of outrage further, a latest investigation by the Indian Express carried in this report found that while ‘twenty-eight state-owned banks wrote off a total of Rs 1.14 lakh crore of bad debts between financial years 2013 and 2015’ there is no clear answer to ‘who approves such write-offs depends on which bank you are asking’. In the Right to Information (RTI) applications filed with 28 public sector banks (PSBs), one of the questions asked was who had the final say in writing off loans to the tune of Rs 100 crore or more as non-performing assets (NPAs) . The answers sampled in the report are indeed shocking – the answer is no one knows really or we cannot tell. All one can say is the write offs turn out to be a bonanza for the privileged companies in the long run. The question one may ask is whether this ‘norm’ in the banking sector in India is likely to undergo a change or will it be life as usual with humungous amounts of public money going down the drain and with no funds left for the deserving entrepreneur.