The ponzi banks of India

It comes as no surprise that S&P had downgraded SBI. Even with accounting gimmicks, its NPA still stands at 5%. Its Mar 2012 SEC filings show contingent liabilities (liabilities that may be incurred in the future) at 698,064 Crores (that is right folks, over 6 lac crores!).

Not only SBI, but a host of other banks have huge exposure to loans that will never get repaid (SBI, for example, has 1800 crore loan to Kingfisher, which is pretty much closed). Not only this, many political biggies use the PSUs as their personal cash cows. Getting them to disburse loans that will never get repaid!

Year on year, with creative accounting they show profits while writing off loans and asking the government for every increasing “capitalization”

Recent News:

SBI group requires Rs 1 lakh cr to meet Basel-III norms

PNB to undertake Rs 2360 crore capital infusion

IOB needs 1500 crore infusion this fiscal

Google and you will find several more. In summary, most of our banks are bankrupt. The profits & dividends seem to come out of the deposits collected, making it one big ponzi scheme. The government itself is running a huge deficit, so where is this “capitalization” money going to come from? That’s right, printing! Run the presses, never mind the inflation or the currency debasement!

While the world looks with bated breath on the money printing in the US, our own “M3” money supply is many times that!