Over 90 percent of operating profit of PSBs spent on settlement of bad loans, claims employees’ union

The All India Bank Employees Association (AIBEA) – the oldest and largest national trade union of bank employees in India – has claimed that more than 90 percent of the operating profit posted by public sector banks in the last 13 years has been spent on settlement of bad loans.

The situation worsened after the Modi government took over in May 2014.

The AIBEA has released the data after analyzing the balance sheets of 12 public sector banks including SBI and claimed that while PSBs recorded an operating profit of Rs 15 lakh 97 thousand crores between 2009 to 2021, more than Rs 14 lakh 40 thousand crores have been spent on the settlement of bad loans.

According to the data analyzed by the AIBEA, public sector banks have recorded negative trends in operating profit from 2015-16 to 2019-20. The data shows while public sector banks published negative operating profit of Rs (minus) 17,993 crores in 2015-16, it rose to Rs (minus) 85,371 crores in 2017-18.

In 2019-20, the public sector banks have recorded an operating profit of Rs (minus) 26,016 crores.

Operating profit is distinct from gross profit and net profit which may vary from year to year. It is called total earning also, excluding the deduction of interest and taxes in a given period of time.

AIBEA has been at the forefront of leading anti-privatization movement against the Modi government’s attempt to privatize two public sector banks.

The United Forum of Banks (UFB) has led a two-day nationwide strike against the Banking Laws (Amendment) Bill 2021 which AIBEA and other unions believe will pave the way for the privatization of public sector banks in India.

It was widely anticipated that the government may pass Bill in the last two days of the Winter Session. However, due to tremendous public pressure, the Bill has been put off, feel observers.

Finance Minister Nirmala Sitharaman on Tuesday said that no decision has been taken to privatize public sector banks in the Cabinet meet.

“Consideration of various issues related to disinvestment is entrusted to the Cabinet Committee designated for this purpose. The decision by the Cabinet Committee has not been taken in this regard,” Sitharaman told Rajya Sabha after the government failed to strike a deal with the unions, despite holding several rounds of talks with them.

National Herald has reported earlier that till the evening of December 15, the government was holding talks with the representatives of the bank employees.

Due to the settlement of bad loans in favor of 13 big corporates including DHFL and Bhushan Steels, public sector banks have incurred a loss of over Rs 2 lakh 84 thousand crores in the last two years, NH had earlier reported.

General secretary of the AIBEA, CH Venkatachalam said, “It is a matter of reality that time and again public sector banks have been used to bail out ailing private sector banks such as United Western Bank, Bank of Karad, etc. In the recent past Yes Bank was bailed out by the public sector bank SBI.”

“Private sector’s largest NBFC, IL&FS was again bailed out by the public sector SBI and LIC,” he added.

Ventakchalam argued that that a huge loss to the public sector banks was a result of the ‘resolve policy’ adopted by the Modi government.