In reference to the list of top 50 bank defaulters in the country released by the RBI, the official Twitter page of Karnataka Congress today posted a tweet claiming that the apex bank had written off loans worth Rs 68,000 crores to those who could afford to pay it. Accusing the government of favouring rich capitalists over poor people, the tweet mentioned that a staggering Rs 2,212 crores of debt by the Ruchi Soya Industries, which belongs to Patanjali group, have been written off.
What prompted RBI to write off ₹68000cr to those who can afford to pay.— Karnataka Congress (@INCKarnataka) April 28, 2020
Staggering ₹2212cr has been written off for Ruchi Soya which belongs to Ramdev & Balkrishna.
Their company Patanjali reported ₹8330 cr revenue!
Why rich capitalists loans are written off & poor ignored?
Through the tweet, the Congress party has insinuated that the BJP has been helping its “capitalists friends” by writing off their loans while turning a blind eye towards the miseries of the underprivileged people. It cited the case of Ruchi Soya Industries, which belongs to Ramdev baba’s Patanjali group and whose loan worth Rs 2212 crores was written off by the banks. The Congress party alluded that the close relationship between Ramdev Baba and the BJP is the reason why an astounding loan amount of Rs 2212 crore by Ruchi Soya Industries was written off.
The Karnataka Congress’ allegation against the BJP came after it got hold of a response by the RBI to an RTI in which the central bank listed the top 50 wilful defaulters accused of cheating Indian banks and loans taken out by them that have been written off. The RTI query was filed by a man named Saket Gokhale who claims himself to be an RTI activist.
This is why Finance Minister @nsitharaman tried to escape from a straight & clear question asked by Rahul Gandhi.— Saket Gokhale (@SaketGokhale) April 28, 2020
Sadly – the truth can never stay hidden too long.
Massive kudos to RG for calling the govt’s bluff way back in March!
PS: Here’s the list if anyone missed it 😊 https://t.co/OA4moYdTYz pic.twitter.com/JsaoBewhBT
However, there is little merit in the accusations levelled by the Congress party. Though Saket Gokhale had sought the list of defaulters as on February 16, the RBI provided the information on top 50 wilful defaulters and their sum of the funded amount outstanding and amount written off as on September 30, 2019, claiming that the requested latest information was not available with the central bank.
As of September 30, 2019, Ruchi Soya Industries was an independent entity, having no links with the Ramdev Baba’s Patanjali group. Headquartered in Indore, Ruchi Soya, once one of the largest processors of edible oils, filed for bankruptcy in December 2017. Its accumulated debt was Rs 12,000 crore; sales had fallen from Rs 31,500 crore in 2014-15 to Rs 12,000 crore in 2017-18.
In December 2019, the Patanjali group completed the transfer of the equity and debt portion for its acquisition of Ruchi Soya through proceedings under insolvency and bankruptcy resolution. In this deal, Patanjali had infused Rs. 1,150 crore as equity and the remaining Rs. 3,200 crore had been raised through bank debt. After Patanjali acquired the company, all the dues of the company were paid off, as informed by the Patanjali group.
The funds transferred by the Patanjali group for Ruchi Soya’s acquisition would have come as a boost for the banks as they would have been able to write back the amount received from the resolution. Since the list shared by the RBI is from September 2019, the updated list of defaulters will not have the name of Ruchi Soya as it became a Patanjali group firm in December 2019 and all its dues as pegged by the National Company Law Tribunal(NCLT), which presided over its insolvency proceedings, were settled off by the Patanjali group.
However, this nitty-gritty of Ruchi Soya’s acquisition was lost on the Congress party which had shared outdated data to assert that the government is hand in gloves with the capitalists while ignoring the plight of poor people. The Patanjali group followed the Insolvency and the Bankruptcy Code to legitimately acquire the Ruchi Soya Industries without seeking any special favours from the Modi government. It also paid the dues owed by the lenders of the Ruchi Soya, thereby reducing the write-off loans of many banks, including SBI, one of the largest lenders to the Ruchi Soya Industries group. With the aim of painting the BJP as a purveyor of crony capitalism, Congress deceitfully shared old data to assert that the central government has written off loans of organisations whose founders have ideologically aligned with the ruling dispensation.
Another important point is that writing off a loan does not mean it has been waived and the borrower no longer need to pay it. Writing off a loan means the bank acknowledges that a loan has gone bad and the borrower is unable to service it. This is an accounting procedure to reflect the true picture of the finances of the bank, because if if is not listed as non-performing asset (NPA), it will continue to show as good loan in the book of bank. Such not listing NPAs in time has resulted in collapse of banks like Yes Bank and PMC Bank. Even after a bad loan is written off, the banks continue the efforts to recover the money. It is done by selling the pledged assets and securities, and if it involved criminal charges, the law enforcement agencies also take over the properties of the defaulter. For example, properties worth crores have been seized from defaulters like Viyay Mallya, Nirav Modi etc, and banks can get their dues from such assets.
Leftist lawyer Prashant Bhushan, who is notorious for spreading fake news, had also made the same claim as Karnatak Congress and accused the govt doing undue favour for the Patanjali group. But in a surprisingly rare move, later he apologised to Bab Ramdev after he was informed about the details of the transaction. Although Prashant Bhushan is not known for accepting that he has spread fake news and mostly he brazens it out after his fake news is pointed out by netizens, today due to some reason he accepted his mistake and offered an apology.