Bad bank a bad idea, bankers to strike work today

The All India Bank Employees` Association (AIBEA) has called a country-side strike on Tuesday to demand the recovery of bad loans and criminal action against wilful defaulters -- rather than creating a separate entity to handle this.

"The real menace affecting the Indian banking industry is the rise in bad loans and the number of wilful loan defaulters. Fixing accountability for bad loans and taking action against the bank officials and also wilful defaulters are the need of the hour and not a bad bank," AIBEA General Secretary C.H. Venkatachalam told IANS on Monday.

The union is part of the United Forum of Bank Unions (UFBU) an umbrella body of nine unions that is spearheading the bank strike.

Venkatachalam said around 10 lakh bankers -- ranging from officers to clerks -- belonging to the nine unions will join the strike.

The Economic Survey 2016-17 has suggested the establishment of a "bad bank" to deal with the non-performing assets (NPA) or bad loan issue.

It said a centralised government owned Asset Rehabilitation Agency could take charge of the largest, most difficult loan cases and take politically tough decisions to reduce debt.

According to Venkatachalam, the idea is nothing but transferring the bad loans from one government entity to another. He said the asset reconstruction companies are buying the bad loans at a highly discounted rate and pay just 10 per cent up front and the balance is spread over several years.

"Such a method is not useful for the banks. Some years ago, IDBI Bank`s bad loan of Rs 9,000 crore was transferred to Stressed Asset Stabilisation Fund. Now IDBI Bank`s NPA is over Rs 20,000 crore," Venkatachalam said.