New Delhi: Trashing the proposal for creating a "bad bank" to take over non-performing assets (NPAs) of financial institutions, CPI(M) on Tuesday demanded that Prime Minister Narendra Modi reject the move and start recovery of pending loans from top 100 borrowers on priority.
"The need of the hour is to put into practice an urgent action plan to start recovery of pending loans from top 100 borrowers. We hope you will reject this proposal of creating a 'bad bank' and start recovery of bad loans on priority.
"Anything less would be tantamount to dereliction of your constitutional duty as the PM of this country," CPI(M) General Secretary Sitaram Yechury said in a letter to Modi.
Yechury referred to recent reports that bad loan provisioning for most state-owned banks "doubled and even trebled" in some cases during 2015-16.
But the government waived loans to the tune of Rs 59,547 crore of big borrowers during the fiscal, he said.
"You must begin by making public their names with the due amount. A failure to do so would mean that your government is making our working people pay for the criminality of the rich defaulters. This is an inversion of the principle of natural justice," he said.
The CPI(M) leader suggested that the big borrowers have viable assets that can be easily recovered by banks "if backed up with political will and determination".
Instead, Yechury said, the government has come up with a proposal to divert all the bad loans from state- owned banks by creating a single "bad bank".
He said the idea is an "attempt" to portray a clean-up of bank account books by diverting bad loans to a separate entity which will still be government-owned and furnished by public money even as big borrowers would be allowed to go scot-free.
"This amounts to cronies being rewarded for their profligacy, bad business practices and their lavish personal lifestyles by the hard-earned savings of the vast majority of the middle classes and the poor of this country," he said.
According to media reports, setting up of a "bad bank" is being proposed to help absorb "toxic assets" from loss-laden state-owned banks and lenders.
The "bad bank" is meant to buy non-performing assets (NPAs) from lenders to free up their books. This would help banks do fresh lending and then suitably dispose of the toxic assets, the reports said.
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