An infographic tweeted by the official Bharatiya Janata party Twitter account on April 14 claimed that the “Insolvency and Bankruptcy Code (IBC), 2016, has resulted in recovery of Rs 4 lakh crore out of staggering Rs 9 lakh crore of NPAs or bad loans given to the corporates under UPA government”. The claim was faithfully tweeted by scores of followers. Other than the loyalists and the most gullible, it is a claim that most would find difficult to believe. Alt News digs deeper to get to the bottom of this claim.
The original tweet has now been deleted, but a grab of it can be seen below.
The Prime Minister’s website also carried this story in the media section. That has also been deleted.
Spread of misinformation
The figure of recovery of Rs. 4 lakh crore was traced to an Economic Times article on April 4 titled “Rs 4 lakh crore NPAs have returned due to insolvency system: Official”. It reported that “Less than half of the staggering Rs 9 lakh crore worth of non-performing assets (NPAs), or bad loans, accumulated by banks had returned due to the system set in place by the Insolvency and Bankruptcy Code (IBC), 2016”. The report, which was written by the IANS news agency, quoted Corporate Affairs Secretary Injeti Srinivas as the official who revealed this figure while speaking at the conference on Resolving Insolvency organised by industry chamber Confederation of Indian Industry.
Like all pro-government stories, this news story was also circulated by Prime Minister Narendra Modi’s NaMo App and dutifully shared by BJP/National Democratic Alliance ministers, MPs and MLAs on social media.
The information was picked up by fake news website Postcard News which spiced it up further with the headline, “Massive crackdown by Modi government on NPAs.”
Many people fell for these figures, including chartered accountants, self-professed slayers of hoaxes and promoters of The True Picture, an alleged fact checking website promoted by Union ministers. “NPA by Congress: 9 lakh crore, recovery by Modi: 4 lakh crore” and “44.44% of outstanding NPAs of 9 Lakh Crores have returned” due to the recently launched insolvency system sounded entirely believable to them.
After the news did rounds of Postcard News and right-wing handles, it was shared by BJP without checking with their own government sources about the accuracy of the data.
Reserve Bank of India data on the recovery of non-performing assets tells a different story. According to RBI data presented by Minister of State for Finance Shiv Pratap Shukla in response to a query in Rajya Sabha in March, over the last four years, the public sector banks recovered only Rs 29,343 crore out of Rs 2.73 lakh crore of bad loans that were written off.
Even though banks have failed to recover the bulk of bad loans, it is important to keep in mind the important distinction between loan write-off and loan waiver. Many on social media have been confused about this and have projected the loan write-off as loan waiver by the banks. A write-off does not mean that the borrower has been given a clean chit. There will be continuing attempts to recover the balance, including through the system put in place by the Insolvency and Bankruptcy Code. The final result of recovery efforts remains to be seen. For now the recovery rate has been 10.77%, which means that more than 89% of the non-performing assets written off by state-owned banks during the four-year period could not be recovered during this period.
Alt News contacted Corporate Affairs Secretary Injeti Srinivas to get a clarification about the discrepancy between the RBI data and what he was quoted by media as saying. He told Alt News in a written response: “I have been misquoted in the media on this matter. What I stated was that, nearly 50% of the NPAs have got referred to the system put in place under IBC.” He clarified that the basis of the Rs 4 lakh crore figure by explaining that “at present cases involving Rs 3.30 lakh crore have been referred to NCLT [National Company Law Tribunal]. In addition to this claims amounting to Rs 83,000 crore have got settled before admission. Together it exceeds Rs 4 lakh crores.”
The claim made by BJP via its tweet seems to be an error and it was deleted once the error was realised. The so-called fact checkers of the right-wing who have been waxing eloquent about the difference between loan write-off and loan waiver fell for such an obviously false claim. They believed that Modi government has magically recovered Rs 4 lakh crore out of the total NPAs of Rs 9 lakh crore and shared the false information widely on social media. The source of misinformation was The Economic Times article that published the IANS report without basic fact-checking. Doubts were raised by Indian Express and Firstpost, both of which pointed out the inconsistency with the Reserve Bank of India data.
This article first appeared on Alt News.