Winsome shady deal symbolic of PSU banks' bad-loan rot

Moneycontrol BureauA little-known corporate, the Winsome Group, appears to have fleeced public sector banks to the tune of Rs 6,500 crore -- and in the process created a non-performing asset that nearly rivals the size of India’s most famous NPA issue: the Kingfisher group’s.A report in the Times of India says the Central Bureau of Investigation (CBI) has launched an investigation into the workings of the Winsome Group, which defaulted on a Rs 6,500-crore loan citing failure of payment by its Gulf-based trading partners.But the newspaper has secured access to documents that show each of Winsome’s distributors, which were each registered in quick succession, are controlled by one single person, and at least one of the entities may be related to the group.Further, there are indications that Winsome may have not even have provided such credit to its distributors and that the funds may have been diverted elsewhere outside India.The news comes amid the backdrop of a slew of stories involving an unholy nexus between public sector banks and corrupt businessman.While much was being written over the bribery scandal at Syndicate Bank involving Bhushan Steel, to which banks have a Rs 40,000 crore exposure, this morning, there were  reports of a CBI investigation being initiated over an alleged Rs 460-crore fixed-deposit scam involving Oriental Bank of Commerce and Dena Bank.Experts say that at least some of the Indian banking space’s NPAs (which topped out at 4 percent for FY14, mainly driven by state-run banks) may be attributable to corruption rather than incompetence or forced lending by government policies.Recently there were reports the Finance Ministry is looking to revisit a number of cases of high-level appointments that took place in public sector banks over the past year or so, amid talks of how several such appointments may have been gamed by vested interests.In a running series, Mint editor Tamal Bandyopadhyay recently captured how corruption in the public banking space operates: it could start with a gift – a gold coin, box of Alphonso mangoes or a flat for the banker’s children settled abroad -- against loan sanctioned, or how bankers may sometimes act corrigibly out of fear of rubbing certain politicians the wrong way rather than out of favour. The report of the PJ Nayak committee appointed by the RBI -- unpopular among bank unions as it may be if it were to implemented wholesale – spoke of path-breaking reforms to be carried out in order to streamline PSBs: reducing government stake, giving greater independence to bank boards as well as forming an independent holding company to run such banks, etc.But while such reforms may be, in themselves, difficult to push through, maybe the recent spate of bad news could provide the much-needed impetus for at least some to be implemented.