Thankfully, it says that this diversion is not to the pockets of promoters, but rather for setting up new projects, helping or promoting sister concerns etc. Time and cost over-runs are identified as the next most important reason for default.

Apart from business reasons, fraud and siphoning off funds, and credit disbursal deficiencies by banks have also been cited as reasons for sickness. The conclusion drawn is that internal factors rather than those related to business environment are preponderantly reasons for default. As expected, the priority sector has been identified as the villain of the piece, with the NPAs' proportion in this sector at 46.4 per cent of total NPAs.

But perhaps the most damning indictment has been reserved for the legal process. Out of all suit filed cases of Rs 1 crore in 15 banks visited by the study team, recovery process had been carried to its conclusion, that is the amount had been recovered and account closed, in only one solitary instance. References to BIFR have been criticised, as instances have been found of these references being misused in order to avoid paying debts.What needs to be done has been repeated ad nauseam in a hundred seminars.

Bankruptcy laws, scrapping the BIFR, improving the functioning of debt recovery tribunals, giving banks foreclosure powers available to state financial corporations, are all prescriptions which have been discussed. Implementing these recommendations, however, remains a distant dream.

Yet there is a silver lining. It is noteworthy that NPAs as a percentage of net assets went down in 1998, a year of an economic downturn. While NPAs may rise somewhat in 1998-99, in overall terms they seem to have been kept within limits, although there is undoubtedly an element of evergreening present. Fact remains, however, that an economic recovery will cut NPA percentages, and it is this expectation which has fuelled the recent rise in most bank stocks. But there is yet another positive development.