Great Indian banking ‘tamasha’
By Our Special Correspondent
New Delhi, June 20: Three top ranking banks of the country extended loans to ‘Great Indian Tamasha Company’ which had guarantor as ‘Great India Nautanki Company’ to the tune of over Rs 140 crores.
The loans were provided to a business model which was questionable at the outset. The company hardly had the credentials to access such a large amount of loan. The result is now that the banks are selling much undervalued land stocks to recover the bad loans.
IDBI bank was the top banker for the company, extending a loan of about Rs 60 crore which along with interest now amounts to a total outstanding of over Rs 86 crore.
HDFC Bank and Bank of Baroda have outstanding with the bankrupt company of Rs 6 crore and Rs 49 crore respectively.
The IDBI Bank has come out with a public notice for the e-auction of the mortgaged land at a reserve price of Rs 11.53 crores.
The land is in the Kodagu district of Karnataka while the company is registered in Delhi with a paid up capital of Rs 2 lakh.
India’s top banks gave loans to the company which was in the business of live entertainment with land as collateral in Karnataka while its operations were said to have been in Gurgaon supposedly with theme park. In Gurgaon, the company purportedly operated ‘Kingdom of Dreams’.
The IDBI bank has successfully pursued the liquidation of the company with the National Company Law Tribunal.
But the case reveals the way the corporate loans are extended which turn into non-performing assets (NPAs), with questionable due diligence.
The common people may legitimately ask why they are not provided with such liberal loan facilities without matching collateral.
In 2021, Indian public sector banks had a total of over Rs 6 trillion in non-performing assets. The private banks in 2021 had over Rs 2 trillion in non-performing assets.
It may be recalled that Indian banking sector was wrecked by the scale of non-performing assets or bad loans from 2013 onwards, requiring the government to pump in the tax payers’ money in the public sector banks to help them meet the statutory norms.
There had been a debate among the financial experts why such badly managed banks are allowed to stay alive when they cannot execute due diligence while releasing corporate loans.
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