Pune: All India Bank Employees Association (AIBEA) Vice President Vishwas Utagi, on Wednesday, said the public sector banks in India are heading towards disaster owing to the government’s anti-people policies.  He was speaking at a talk titled ‘Forthcoming Budget: Frustrations and Expectation’, which was organised by the Academy of Political and Social Studies and Janvitta Abhiyan.

Underlining the poor financial condition of public sector banks and financial institutions, Utagi said, “Almost all nationalised banks were in profit in January 2015.

“Three years later, in 2018, all of these banks are facing huge losses. All the ratios, on which the health of the banks is determined, indicate that the banks are in a terrible condition.”

Utagi attributed this condition to the tremendous rise in the Non-Performing Assets (NPAs) of the banks. “Banks have given huge loans to corporates without taking proper securities or mortgage. Vijay Mallya was given a Rs 9,000 crore loan against securities of only Rs 200 crore. The same way, Videocon and Essar were given loans of Rs 65,000 crore and Rs 1.30 lakh crore, respectively. According to global norms, banks will have to be shut down and the government policy is making sure they will be.”

Raising doubts about the intention of the Bankruptcy and Insolvency Code brought in 2016, he said that the law is an escape route for the debtor, who are actually capable to pay back but choose not to. “The American corporates used the same escape route in 2008. They just raised their hands and disowned responsibility. Banks are being forced to raise more and more capital from their profits.

“This started with Raghuram Rajan, who instructed banks to wipe out these bad loans. Profits belong to the people of the country and this national property and they are being used to save the corporates.”

Firing a salvo at the Asset Reconstruction Companies (ARC), he said that these companies are making profit out of people’s deposits. “Banks sell their bad loans to the ARCs for a small amount. These ARCs then sell off these purchased assets in the market and make a killing. There is a whole chain of financial institutions that profit from this. Public banks are shown as inefficient and corrupt, but it is not so. The corruption is in the systematic collusion between corporates, bankers and the government,” he said.

Utagi claimed that the economy is heading for disaster. “The bubble will soon burst and the middle class will collapse. LIC is being bled by Rs 3,000 crore each month to save the economy from collapsing. The Financial Resolution and Deposit Insurance (FRDI) bill is being brought in to use the common man’s deposits to save the banks, who are facing doom due to bad loans.