JOIN USKingfisher Airlines loan default only a trickle: Vinod Rai
As industrialist Vijay Mallya fights his wilful defaulter tag, former Comptroller and Auditor General (CAG) Vinod Rai has said Kingfisher Airlines' loan default is just a "trickle" and the overall problem of huge bad loans at public sector banks can be blamed on 'cronies' using connections to borrow money.
Rai, who was the CAG during 2008-2013, has also stressed the need to understand the trend of non-performing assets of private sector banks being very low in comparison to that of public sector lenders.
Observing that cronies have neither the domain knowledge nor the financial strength to deliver, Rai in his new book has said that they use their connections to borrow from the banking sector, especially from public sector lenders that are prone to manipulation.
“This is the underlying reason for non-performing assets (NPAs) of public sector banks going up manifold,” he has written in the book titled 'The Dairy of the Nation's Conscience Keeper -- Not Just An Accountant'.
“Stories of Kingfisher Airlines and Bhushan Steel are only now emerging in trickles. The amount that has gone into corporate debt restructuring is another story; it contains all the marquee names,” he said.
On September 1, state-owned UBI declared Kingfisher Airlines, its promoter Vijay Mallya and three other directors wilful defaulters. Kingfisher owes about Rs 7,000 crore to 17- banks consortium, led by State Bank of India (SBI).
According to Rai, the RBI data showed that gross NPAs of public sector banks increasing to 3.61 per cent, which by all standards marked unprecedented high levels in 2013.
“Even if we were to accept the argument that these banks had to advance money in difficult times, why is it that the NPA of private sector bank is only half this percentage? It does not require much analysis to ascertain the reasons,” he noted.
Further, the former CAG has raised concerns about the appointment process at public sector bank boards.