Name industrialists whose NPAs were waived, CPM tells Modi govt

NEW DELHI: Accusing the Narendra Modi government of “crony capitalism” in the aftermath of the “Nirav Modi scam” and the “murky Rafale fighter deal”, the CPM has said the government’s claim of a corruption-free regime is now in tatters.
Demanding that the prime minister release the names of industrialists whose bad loans were waived, the CPM also said a Joint Parliamentary Committee should be set up to probe the Rs 11,400 crore Punjab National Bank scam. In the latest edition of CPM mouthpiece People’s Democracy, the party has referred to the PNB scam as the “most brazen and shocking case of defrauding in the history of Indian banking”. “Is this what “ease of doing business” amounts to in Modi’s New India?”, the editorial asked.

Pointing to wider ramifications of the PNB scam for other nationalised banks, the CPM editorial said, “Four other banks – SBI, Union Bank, Allahabad Bank and Axis Bank – also have exposure. It is estimated, based on data from an RTI query, that there were 8,670 cases of ‘loan fraud’ totalling Rs 612.6 billion in the past five years ending March 31, 2017.”

The editorial has also referred to how banks, in the period of rapid liberalisation, have undertaken “risky investments”, and pointed to the “severe implications of liberalisation/deregulation of the banking sector and the instructions to banks to pursue profit by any means”.

It said, “Instead of holding liberalisation policies squarely responsible for the scams of the PNB type, spokespersons for neoliberal policies have predictably come out attacking bank nationalisation and public sector banks. The chief economic adviser Arvind Subramanian has used the scam to argue not just for increased deregulation, but for increased ‘private sector participation.’ He has argued for majority private ownership of PSBs.”

Holding the alleged “pursuit of neoliberal policies as the root cause of the scam, the CPM mouthpiece has also warned against the perils of privatisation. It said, “Since independence till 1969, 559 private commercial banks collapsed, leaving the depositors high and dry. Post nationalisation, 25 private banks that failed were rescued through a merger with PSBs, including the so-called “new generation private bank", "the Global Trust Bank.”

It added, “The RBI inspection department has been put in mute mode....The logic of profit maximisation in a competitive banking environment has driven PSBs down the slippery road of risky lending and seeking income through interest margins and without due diligence.”