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Movie : The anatomy of NPAs :

Lead Actor: A Pvt Ltd MSME enterprise. As I can't disclose the name - Let's call it SOS.

Supporting Actors : Here is the list :
1. Careless & indifferent PSU Bank.
2. A duuuulopment & Phreeee Markets Messiah (u know him).
3. A ruined economy
MOS is in printing business. Started by an technocrat entrepreneur. Incidentally, he's a quintessential Gujarati business-man.

Let's call him Mr. Patel.

SOS banked with State Bank of Patiala since 2006. In 2008 it availed of a loan of 14 Crores for modernization.
Remember those days ??

Days of boom. Everyone was confident & has aspirations as the PM was inspirational. Everything was rising. Business. Economy. Land prices. Incomes.

The repayment was scheduled over 7 years. To be repaid by 2015.
The business acumen of Mr. Patel & a booming economy made it possible to repay the entire loan by 2012 itself. Yes. 3 years in advance.

In 2014 - India elected a duuuulopment & Phreeee Markets Messiah.

Mr. Patel was basking in his business growth.
The early repayment of Term Loan gave a boost to his entrepreneurial spirits. And the illusion of hope created around the country, especially, Gujarati business community, made him take a decision to add on cutting edge printing technology at his unit.
He availed of second Term Loan of Rs. 10 Crores and an enhancement of a few crores to his CC limit in August 2014.

By March 2016, the economy had faltered and his business was down by 20-25 %.

Being an honest entrepreneur, he wrote to the PSU Bank i.e. State Bank of Patiala
He apprised them of the situation and requested for a solution. The Bank asked him to wait till June 2016 till the audit etc got over. Seeing no response from the bank, he decided to shift his office from Andheri to his factory premises on the outskirts of Mumbai.
By August 2016 it became clear that the SBP isn't doing anything. So he moved a proposal and sought permission to sale the Andheri office premises which had a mortgage. His plan was to sell off the same and reduce the exposure from Rs. 23 Crores to Rs. 5 Crores.
That way, he wd have been able to service the debt and meet the working capital requirement of his industry. Till October 2016 SBP sat over his proposal. He even offered to visit Patiala to meet the Senior Management & explain his situation & request them for an early resolution.
By Nov 2016, the payment of salaries & utilities started getting affected. He had no option but to stop paying interest and installment.

That's when #DeMoDisaster came to be announced. SBP stopped entertaining his requests & even declined meeting citing the workload due to #DeMo
31st Jan 2017, the account was marked as NPA. Despite best efforts of Mr. Patel to avoid it.

In Feb 2017, SBP issued notice u/s 13(2) of the Sarfaesi Act. Mr. Patel pleaded with SBP that take back the notice and allow him to sale the office property.
But he was told that SBP has been asked to "HOLD" everything as a merger with State Bank of India was to happen on 1st April 2017. And all the decisions will be taken by SBI after migration of the account.

To live up to their reputation of being a lethargic PSU Bank -
The loan account wasn't migrated till July 2017. Mr. Patel had no-one to talk to. He did know where his account will be migrated. Just imagine his plight.

Finally, a/c was migrated to Stressed Asset Management Branch, Nariman Point.
In the very first meeting : the banker threw up his hands. No-no- the a/c is under recovery and no settlement is possible. Mr. Patel reasoned with him that his settlement proposal envisaged reduction of debt by 70-75%. But the Babus have different orientation. 🙃Nothing worked.
Mr. Patel doggedly pursued the Bank & presented it with his excellent track record and the ability of the unit to bounce back to health and profitability. The Bank relented. Visited his factory. and offered a settlement (w/o haircut) Just a repayment plan.
So in Feb 2018 Mr. Patel borrowed 1.5 Crores to pay for the upfront amount. He had planned to raise the balance amount from sale of the Office.

But to his misfortune, the real estate market had tanked. His ads on Magic Bricks, 99 Acres etc & numerous calls to brokers - in vain
He could not sale the property. The settlement failed. The Banker started pursuing recovery under the draconian Sarfaesi Act.

That's when Mr. Patel came to me.

We got his account audited and interest verified from a Chartered Accountant. What we found was astonishing -
The bank had overcharged him to the tune of Rs. 1.02 Crores in interest. So his account ought NOT to have been marked as NPA on Jan 31st 2017.

We made a representation to the bank. The bank is yet to reply. Meanwhile, the bank has taken symbolic possession of the assets
And Mr. Patel is staring at a long drawn legal fight before DRTs / HC & SC.

Now if we don't care about Mr. Patel, if we don't insist on mechanisms to redress such grievances in time, if we make sweeping statements & brand "doers" like Mr. Patel as "defaulters"....
It would be highly unjust and it would lead to catastrophic long term consequences. Instead, what we are doing is to enact more stringent penal laws. We have become a lynch-mob. We have said good-bye to scrutiny, prescience, perusal, remedial measures to preserve entrepreneurship
And I'm sorry to say that - the road we have taken leads to an abyss. Literally and figuratively.

A course correction is needed.

But who'll do it ??

We are busy doing Hindu-Muslim. Mandir - Masjid.

The duuuulopment Messiah is doing Shamshan - Kabristan.

STOP. 🙏🙏

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