Banks, merger of banks
Middle classes form the bulk of depositors in the banks. It is these deposits that in turn form the bulk of the working capital that allows banks to operate. This year’s Economic Survey, in fact, rejoices in the double-digit growth in bank deposits. And yet, middle-class depositors have been shortchanged over the years by the dwindling interest rates on their savings bank deposits. “The interest on savings bank accounts, which was 5% in 1977, was brought down to 3.5% in 2003, and now it has come down to 2-2.5%,” says Thomas Franco, former general secretary of the All India Bank Officers Confederation. “If the middle classes were paid their fair share of interest at say 5%, they would have earned near about Rs 1.8 lakh crore more last year.” https://thewire.in/economy/the-banking-sector-reveals-the-middle-classes-arent-really-getting-a-bonanza
This is far more than the Rs 1 lakh crore that the finance minister claims to have “foregone” with the tax rebate she bragged about. Fixed deposits account for nearly 60% of all bank deposits, and as per the Economic Survey, its share in bank deposits is growing. If one takes into account that the interest rates on FDs have nearly halved over the last two decades, the actual earnings foregone by the middle classes are massive. And yet, there seems to be a general acceptance of this as fait accompli.
The real story behind disappearing NPAs
The banks have written off a whopping Rs 16.5 lakh crore in bad loans over the last decade. In fact, Rs 1.69 lakh crore has been written off in 2024 alone! It is the public sector banks (PSBs) that have taken the major share of these write-offs and it is the corporates who account for the major share of these bad loans or NPAs.
the middle classes – the rates tell the same story of disparity. When it comes to loans, one observes that the low interest ones (under 8%) are more accessible to the corporates (17.2%) than the household sector (4.4%). Meanwhile, loans with interest rates above 11% are disproportionately high among the household sector (29.4%) while much lower for the corporate sector (8.8%). So, despite contributing the bulk of the bank’s deposits, the middle classes are deprived of their deposit rates and low-interest loans, apart from the severe understaffing of the banks which also serves to hurt their interests.
So, while a one-time tax bonanza in this year’s Budget becomes an eyewash that suits political interests, the systematic loot of the common person and the middle classes through such raw deals rarely make headlines. After all, who is interested in the detail, when the devils run the show?
by Anirban Bhattacharya and Pranay Raj
07/02/2025
What Kind of Budget Does India's Banking Sector Need https://youtu.be/Dtg8auJvEe0
Thomas Franco Social activist and former Gen Sec of the All India Bank Officers' Confederation Budget 2025: What's at Stake?', Thomas Franco dissects the government’s claims of a banking ‘turnaround,’ as highlighted in the last Economic Survey. Are declining non-performing assets, rising bank profits and increased financial inclusion as promising as they seem?
He also evaluates whether successive budgets have truly delivered on credit support for MSMEs, including MUDRA loans, during financial stress. Finally, Franco outlines what a credit-sensitive budget should prioritise, sharing key recommendations for strengthening the nation’s financial system.
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Greed has made US banks crash again. Will we learn some lessons! THE MONEY TRAIL https://www.youtube.com/watch?v=CO3KmHgWKoo CFA India Mar 20, 2023 It is history repeating for the US. After the great bank crash of 2008 when more than 400 banks went down US government vowed that it will never happen again. But today they are staring at another crisis that may spiral in to a bigger on. This time bond markets failed them. Greed for profit made the now failed banks to invest in markets. Indian banks too are more into markets like never before. In the obsession to maximize profits they want to discourage the public too- shut down rural branches, deny loans, increase bank charges. Will we learn any lesson from US?
Meanwhile in the US, similar to the 2008, government is pumping loads of money to resurrect the banks. Most likely those responsible for the crisis may escape scot free as it was in 2008.
Will it affect India: https://youtu.be/CO3KmHgWKoo?t=341 State of our Banks. CRR requirements. Moving away from Mass banking.. and going into investments etc .
Thomas Franco .. https://youtube.com/embed/CO3KmHgWKoo?start=369&end=456 & https://youtube.com/embed/CO3KmHgWKoo?start=511&end=551 Public Sector bankers which are funding priority sector. the Govt should put an end to talk of privatisation
Recent loan write-off amounts exceeded the funds shortfall to replace old railway tracks and spending on three social sectors.
The compromise settlement mentioned in the Reserve Bank statement means that the outstanding balances of these wilful defaulters may be settled by mutual concession, with dues not being recovered completely. Far from strengthening the means to recover loans from wilful defaulters, the statement speaks of resettlement of the outstanding amount by means of “technical write-offs”.
This has been one of the key ways through which the non-performing assets of public and private sector banks have been shown to be declining in the last few years. It has emerged like a magic wand that makes the bad debt disappear from the balance sheets.
Write-offs by banks, both public and private, over the past 10 years have shown a phenomenal increase. Write-offs by public sector banks increased from Rs 7,187 crore in 2013 to Rs 119,713 crore in 2022. Among these public sector banks, the State Bank of India has in the last 10 years written off the highest total amount, at Rs 297,196 crores.
by Anirban Bhattacharya & Pranay Raj
26/06/2023
312 Big Wilful Defaulters Owe Rs 1.41 Lakh Crore to Public Sector Banks; Here Is the List of Bank Defaulters Yogesh Sapkale 10 August 2022 https://moneylife.in/article/312-big-wilful-defaulters-owe-rs141-lakh-crore-to-public-sector-banks-here-is-the-list-of-bank-defaulters/68026.html According to data obtained under Right to Information (RTI) and analysis done by Pune-based Vivek Velankar, as of 31 December 2021, nearly 2,237 wilful defaulters have an outstanding of Rs1,84,863.32 crore. While RBI had shared a list of names of 2,278 wilful defaulters, there are 41 borrowers against whom there is zero outstanding. "I found 11 defaulters have obtained a loan from State Bank of India (SBI) and other PSBs. These wilful defaulters are ABG Shipyard Ltd, Concast Steel & Power Ltd, EMC Ltd, Rohit Ferro-Tech Ltd, Best Foods Ltd, Coastal Projects Ltd, Wind World (I) Ltd, Era Infra Engineering Ltd, BS Ltd, Rei Agro Ltd and Raj Rayon Industries Ltd," Mr Velankar says.
Moneylife coverage on the issue: https://www.moneylife.in/tags/bankloot.html