United Bank of India has started to "name and shame" prominent defaulting industrialists, publishing a name a day since Saturday.
More such unwanted publicity is in store for many big-ticket loan-takers whose accounts have turned bad loans (or NPAs, non-performing assets, in banking parlance).
So far, Bipin Vohra of SPS group, Sandip Jhunjhunwala of Rei Agro, and Manoj Jain of Jain Infraprojects have figured in the bank's zeal to humiliate industrialists by placing advertisements, carrying picture of directors on the board of defaulting companies.
A prominent absentee in the names published so far is Vijay Mallya, the bank's most high-profile defaulter.
While United Bank has gone after Mallya with great enthusiasm in trying to recover some of the Rs400 crore lent to Kingfisher Airlines, his name doesn't figure in the bank's list of wilful defaulters as on June-end.
That's because Mallya has gone to court, trying to stop the bank from declaring him as a wilful defaulter. He, too, will probably feature in the "name and shame'' list if a favourable verdict comes from the court, bank's executive director Sanjay Arya told dna.
"We had earlier served notice to Mr Mallya, and now a case is being heard at the Calcutta high court, which will be decided soon. The bank will take necessary steps after that," Arya said.
Kingfisher has a total debt of about Rs12,000 crore (with interest on a principal of about Rs8,000 crore). United Bank is among the 17-bank consortium that lent money to the airline.
But does naming and shaming industrialists works as a strategy to recover dues?
"Certainly. We are taking all necessary steps to recover our dues... Publishing pictures of directors of defaulting companies is one such move. These people enjoy good status in the society and general people should know the truth about them," Arya said.
The industrialists whose names have appeared till now are clearly not amused seeing their faces in public notices. They believe this strategy of humiliating them will not serve the bank's purpose.
"We are in the process of Corporate Debt Restructuring and any bank taking such an action will not help the process," Sandip Jhunjhunwala of Rei Agro said.
Rei Agro, the country's largest basmati player, has burdened the banking sector with a stressed loan of Rs5,680 crore.
The bank, which has an exposure of more than Rs224 crore, along with UCO Bank, met in May and asked Rei Agro to come up with a revival plan with active guidance from a 20-bank consortium, following which the company's board gave consent for initiating a corrective action plan in accordance with RBI guidelines.
Shaming the promoters when the restructuring process is on is not warranted, Jhunjhunwala said.
Bipin Vohra of SPS group, who has interests across sectors (steel, shipping, entertainment, and now building the Marriott Hotel in Kolkata after buying it out from Emaar MGF), has more than Rs75 crore in defaulted loans given to his SPS Steels Rolling Mills plus unpaid interests since June 2013.
But the bank has overstepped its limits by naming him, Vohra claimed.
"Negotiations were on... Our plant employs 4,000 people. Also, we have an order from the AAIFR (Appellate Authority for Industrial and Financial Reconstruction) that prevents banks from naming us as wilful defaulters. So, this step is clearly not acceptable," Vohra said.
The other names in the list are of Manoj and Rekha Jain, directors of Jain Infraprojects, which, the bank said, has defaulted in repaying Rs64 crore plus unpaid interests since March 2013.
The group, which is present in infrastructure, realty, steel and energy, had in 2010 filed a prospectus with SEBI for a public issue, which didn't materialise.
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