Top Willful Defaulters Owe IDBI Bank ₹6,609 Crore as Privatisation Threat Looms

The financial health of IDBI Bank has come under scrutiny as the bank struggles to recover ₹6,609.46 crore from its top four wilful defaulters. The bank, which declared 355 defaulters with a total debt of ₹25,443 crore in September 2023, has seen this number rise to 373 defaulters with a total debt of  ₹26,562.05 by 25 October 2024. Despite these challenges, the government is moving ahead with plans to privatise the bank, prompting concerns from various quarters, including banking unions.

Major Defaulters

IDBI Bank's list of wilful defaulters includes prominent names such as ABG Shipyard Ltd, Amtek Auto Ltd, Bhushan Power & Steel Ltd, and Punj Lloyd Ltd. Together, these companies account for ₹6,609.46 crore, representing 24.88% of the bank's total outstanding non-performing assets (NPAs) as of 25 October 2024.

(The above table details the top ten wilful defaulters of IDBI bank and their respective outstanding amounts. *Source: From the list published by the IDBI bank official website.) 

The rising number of defaulters, and the growing sum of unrecovered NPAs, has raised questions about the government’s decision to privatise the bank rather than focus on recovery. Critics argue that selling the bank without addressing the issue of bad loans undermines the accountability needed to protect public funds.

Stakeholders Demand Urgent Govt. Intervention 

There has been growing frustration among stakeholders who feel that instead of holding the culprits accountable, the focus has shifted towards the sale of the bank. Banking unions have voiced concerns about the lack of urgency in dealing with the defaulters and recovering taxpayers’ money.

Vithal Koteshwara Rao, the general secretary of the All India IDBI Officers Association(AIIDBIOA) and a front runner of the struggle against the privatisation move demanded urgent government intervention on the matter. "The wealth of IDBI Bank, built with public funds over decades, is being undermined by the failure to recover NPAs from wilful defaulters. The defaulters utilise the loopholes in existing laws to escape prosecution and confiscation of assets. There must be proper legislation and stringent intervention of the executive and judiciary to prosecute the wilful defaulters and ensure accountability for taxpayers’ money", he told Kanal.  

Government’s Privatisation Move

In the midst of these financial challenges, the government has proceeded with its plan to privatise IDBI Bank. The Reserve Bank of India has already begun the vetting process for the three bidders interested in acquiring the bank, based on the "Fit and Proper" criteria. This has led to concerns about whether the bank will be sold at its true value, especially in light of the unresolved bad loans.

Unions have strongly opposed the move, stating that selling the bank would allow private players to profit without addressing the deeper issues of accountability and recovery. They argue that IDBI Bank, which continues to perform well, could become a national asset once again if the bad loans were properly managed. 

The statistics from the annual reports of the bank also comply with this argument. The key performance indicators of IDBI bank have seen a steady improvement over the years. For example, Profit After Tax of IDBI bank has increased to ₹5,634 crore in FY24 from that of ₹3,645 crore in FY23. The Operational Profit has also seen a rise from ₹8,736 crore in FY23 to ₹9,592 crore in FY24.   

Opposition to Privatisation

Banking unions and employees have been vocally opposing the privatisation of IDBI Bank, pointing out the risks involved in transferring ownership to private or foreign players. Their concerns are rooted in fears of job losses, reduced services for the public, and a shift in focus from public interest to profit.

Protests, such as the recent one at Jantar Mantar on 8 August 2024, have been organised to draw attention to these issues. Union leaders have called for criminal cases against the wilful defaulters and demanded urgent government intervention to recover the NPAs. They also emphasised that selling a profitable bank without recovering outstanding debts is a disservice to taxpayers. IDBI Bank employees and officers have launched the second phase of their protest against the privatisation move with a nationwide black badge protest. AIIDBIOA has called for another black-badge protest on 16 November 2024, Saturday. 

As the government moves forward with plans to privatise IDBI Bank, questions remain about loan recovery and accountability, raising concerns that private players may profit without addressing deeper issues. With ₹6,609.46 crore owed by the top four wilful defaulters alone, stakeholders are urging the government to prioritise recovery efforts to safeguard public funds. Banking unions continue to oppose privatisation, citing concerns over job security and the potential loss of a valuable national asset.