Did Modi surreptitiously waive-off capitalist loans?

– An analysis by Voxytalksy over allegations made against Prime Minister Narendra Modi for allegedly waiving off capitalist loans.

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India’s banking system has started to show signs of slippage in the past few years and now Narendra Modi’s government is being questioned about its ‘transparent’ approach with regards to wilful defaulters on bank-guaranteed loans.

What went wrong?

Billions are being lost in corporate loans, which is a real matter of concern not just for the banks of India, but for you as an investor in the banking chain too! India withstood the financial crisis of 2008, yet it is reeling under the sudden exodus of many high-flying corporates (and wilful loan defaulters) like Vijay Mallya, Lalit Modi and Nirav Modi from India.

This is just the tip of the iceberg! Public sector banks are now burdened with unpaid loans or non-performing assets (NPAs) that have tripled from Rs. 2.3 lakh crores to Rs. 6.8 lakh crores just within BJP’s four-year rule!

The viability of the banking sector in India is now shaken. Non-repayment of loans by many of India’s biggest corporate houses is now accumulating NPAs like bills you have to pay every month!

The Parliamentary Accounts Committee claims that 70% of the NPAs of the banks are due to defaults of big corporate houses on their loans that run into many lakh crores!

Is the Modi Government to blame?


Kind of, yes! In every case where a defaulter escaped, BJP was blamed by the opposition for delaying their arrest and allegedly letting them flee before the CBI or ED could take preventive action.

The Finance Minister Mr. Arun Jaitley, however, has absolved the government of all the blame and claimed that these loans were allotted during UPA government, but have turned bad during BJP’s regime. He is right here, these loans were passed by banks when UPA was in power. However, if these political parties keep pushing the blame, more defaulters will rise and go scot-free!

Has BJP been generous with its favors to the corporates?

The UPA obviously was, which is why we are looking at this crisis currently. However, it seems the BJP is doing the same for a handful of corporates.

It has allegedly doled out loans worth lakhs of crores to many people considered close to Modi (Mukesh Ambani, Gautam Adani, etc.) and since then, there have been many loan refinancing and restructuring schemes introduced by the Reserve Bank of India.

In the last three years of Modi’s reign, many PSU banks have been forced to restructure bad loans (under the various schemes of RBI) worth Rs. 3.5 lakh crores and rename them as NPAs. Almost all of these loans seem to belong to the corporate houses! What this means in RBI terms is that new loans are given to pay off the old ones which were being defaulted on; similar to a bail-out package in real-world terms.

Ex-chairman of SBI Arundhati Bhattacharya downplayed all allegations against banks for writing-off loans by saying that they have been merely clubbed under a ‘different heading’ and the effort to recover loans from such defaulters is still on.

Jaitley even says that ‘Government has not waived any loans of big NPA defaulters. Instead, under the new Insolvency and Bankruptcy Code of the National Company Law Tribunal (NCLT), NPA cases of Rs. 1,75,000 crore will be given time-bound recovery options of six to nine months for the 12 biggest defaulters.’

Another shocking feature is that these schemes allow the defaulting corporates to pay on their own terms to pay off all the money.

Is Modi to blame?

BJP President Rajnath Singh and other senior leader with Gujarat CM Narendra Modi after declaring him the party’s Prime Ministerial candidate for 2014 LS polls at BJP headquarter in New Delhi on Friday 13,2013.
Photograph by Narendra Bisht

Since investigations are still pending, we can’t comment on that, but facts may help you understand the situation.

  • Many power companies controlled by Adani (who is considered close to Modi) owe a debt of Rs. 72,000 crores. However, under the RBI restructuring scheme, loan refinance worth Rs. 15,000 crore has allegedly been extended to the companies especially when these companies didn’t even have the money to cover the interest cost on the previous loans!


The new moratorium on the interest payments was also funny, it doesn’t require these firms to pay the interest amount for the loans!

  • Mukesh Ambani’s company Reliance Gas Transport Infrastructure Ltd. (RGTIL) may also have been given a loan refinance plan of Rs. 4,500 crores and the payment period for this fresh loan has been set for over a decade!

The hilarious fact is that the government forgets that Mukesh Ambani himself has a net worth of over Rs. 1.5 lakh crore rupees and he doesn’t need any assistance in paying back the defaulting loans of his companies, but what can the public really do except complain?


  • Surprisingly, all the defaulting companies collectively owe in excess of Rs. 5 lakh crores to India’s ailing public sector banks, yet they are still functioning! This is India!

What is happening now?

Farmers of the country have to fight and protest for their minuscule loans to be waived, but corporates are born with a silver spoon in their mouths! In the end, most farmers lost, couldn’t repay their loans, and either killed themselves or sold their lands.

This continues still; farm loan waivers aren’t enough when drought hits! The entire amount of India’s crop loans are worth Rs. 75,000 crore and Adani’s firms owe loans worth Rs. 72,000 crores – you decide who needs the restructuring plan the most!

Why are banks silent?


Banks are doing the worst job! They name and shame the farmers (as mandated by the Supreme Court) and auction-off their possessions without any compunction! You don’t see any shaming with Ambani or Adani do you? Nirav Modi and Vijay Mallya are being shamed only because they fled the country; had they been in India, the matter wouldn’t have flared up as much if the media hadn’t intervened.

The public money is being squandered, interest rates are following and 60% of the deposits made by households in banks are in danger of being used as a bailout (don’t forget the FRDI bill fiasco). Mr. Urjit Patel (the current RBI governor) even went on to suggest that smaller banks of India afflicted with NPA problems should be allowed to perish or privatized naturally.


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