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SBI's HUGE loans to ADANI & its impact on you! - YouTube
Channel: unknown
[8]
hi everyone so last month adani took a
[10]
loan of roughly 6000 crore from sbi to
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start a copper manufacturing business
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this month we are in talk to raise
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roughly 14 000 crore loan again from sbi
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to start probably a new business now let
[22]
me take you to a very interesting
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article which talks about the fact that
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india's willful defaulter loans have
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risen up to roughly 2.2 trillion dollars
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this is a 10-fold increase or a 10-time
[32]
increase over the last 10 years and if
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you delve into deeper details of this
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article what you will figure out is that
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95 of these loans have been given by
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public sector banks out of this 30
[44]
percent of the loans have been given by
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sbi alone so on today's video i am going
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to talk about dhani bank of india i am
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sorry i am going to talk about sbi or
[52]
state bank of india and will speak about
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with you in four simple points as to is
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this situation worrisome that something
[59]
like sbi is giving so much loans to a
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big conglomerate how securely have they
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given loans in the past what their track
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record has been like and going forward
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if you are an investor should you
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continue to invest your money in
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something like sbi also a humble request
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before starting the video that please
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press the like button so that these type
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of topics get out to more people they
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are made aware of what is happening with
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taxpayers money it is a very important
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aspect for all indians to get educated
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as to how their money is being spent by
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the governments just to give you some
[88]
context and starting a parallel topic
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here that air india when it was making a
[92]
loss it used to make a loss of 20 000
[95]
crore per day so that was a big loss and
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who was paying for it we the taxpayers
[99]
were paying for it so therefore please
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ensure that whenever you are seeing
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these type of things you share these
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type of videos so with that said let us
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get the story started and i will speak
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in four very easy to understand points
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so point number one is some historic
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context around sbi loans and what type
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of engagements they have been a part of
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while sbi has given a ton of loans to a
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bunch of different people there are
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three standout cases that are the most
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talked about cases in indian media as
[125]
well so let me show you a quick history
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of these three cases so the first case
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is that of mr vijay malia so mr vijay
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malia took a loan of roughly 9000 crore
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and despite all the turmoil that has
[135]
happened he has so far paid only 58
[137]
percent of that money of that 9 000
[139]
crore the rest of it is a loss to the
[142]
exchecker why is that because the lead
[144]
financer on this loan was the sbi
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consortium and sbi had a lot of exposure
[149]
to this particular rule so these type of
[151]
loans will fall in the willful category
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of defaulters so what is meant by
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exactly willful defaulters so willful
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defaulters are people who can
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technically pay the loans by selling off
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their assets but they are choosing not
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to pay those loans by exploiting some
[164]
kind of loopholes now comes the second
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example which is one of the most
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discussed scams of india which is the
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abg shipyard scam now here is the list
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of banks and their exposure to abg
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shipyard and here again you will see sbi
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in one of the top three lenders that had
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the most exposure to abg shipyard now
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third most talked about case was of
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meera modi and mihol chok say and here
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you would say that okay that was punjab
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national bank not sbi so here is a very
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interesting article and i was talking
[190]
about this article with my wife just a
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while back and she could not believe it
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and honestly i don't know if the story
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is true or not but here is the study
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that was done by times of india and what
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they ended up saying was that they
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talked with neerav modi and nirav modi
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said that sbi was his preferred choice
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of lender but he went to sbi he told
[208]
them that he am a big jeweler i need a
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loan but the sbi worker there said that
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hey we are on lunch time and only swiggy
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people are allowed if you don't trust me
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just check this article so sbi got saved
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here and they said that they did not
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have any direct exposure to neerav
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modi's cam and they had indirect
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exposure to him largely because of the
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fact that the worker was probably on a
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perennial lunch so the bottom line
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remains that whenever you see a large
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npa problem looming somewhere you will
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have sbi's names associated with it for
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one reason or the other so now comes the
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second point that why these public
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sector banks they undergo such large
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scale defaults there are multiple
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reasons for the same i will not get into
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political side of the equation because
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of course politicians appoint directors
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all that stuff everyone is able to
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follow along that part of the equation
[253]
but i will talk about more systematic
[255]
issues without making this video
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political so one of the key reasons why
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there is so much shadiness with public
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sector banks is simply because of the
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fact that the operational matrix or kpis
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or key performance indicators are not
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set a classic case in point is punjab
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national bank and nirav modi scam that
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happened so here is the entire article
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and i will read it with you so basically
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it says that in pnb fraud case they are
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referring to the neerav modi scan case
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thereby allowing officers to
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clandestinely issue letters of
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undertaking to move these companies and
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confirming them with counterparty banks
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overseas through the swift system so the
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bottom line is that there was a poor
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linkage between the swift system and the
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core banking internal software so as a
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result the alarms were not raised at the
[295]
appropriate time and the neerav modi
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scam took place now this is slightly
[299]
more complicated stuff to get into what
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i would request you to do is please
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watch a series called as 1992 scam you
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would understand more about the letter
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of undertaking issue so one of the key
[308]
reasons why these type of scams keep on
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happening with public sector bank is
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that their operational parameters are
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not optimized similar to the way it is
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done at top private banks now you might
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turn around and say that you know what
[320]
akshat the abg shipyard scam i can see
[322]
the name icici bank also there true but
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there are two points there number one if
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you take a look at the meta study meta
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study means the big study then you will
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clearly see that 95 percent of willful
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deformed loans still comes from public
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sector banks not private banks second
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key point is the timing of the icici and
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ebg shipyard scan during that time there
[342]
were corporate governance issues with
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icici bank and you had the chanda
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coacher problem also where she ended up
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issuing loans to her own husband for
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business so while it is true that it is
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almost impossible for a bank to
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completely eliminate the bad loan
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problem there are systematic issues with
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public sector bank that we have to
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acknowledge simply because of the fact
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that if you look at the meta study
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almost 95 percent of the data points to
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the fact that public sector banks are
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the ones that end up issuing loans to
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people who become willful defaulters
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eventually now the second key reason is
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there is lack of incentive and
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accountability for example here is a
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statement by dr raghuram rajan and he
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writes in his book i do what i do today
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a variety of authorities monitor the
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performance of public sector bank it is
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important that we streamline and reduce
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the overlaps between the jurisdiction of
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authorities and specify clear triggers
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or situations where one's authority
[393]
oversight is involved so basically what
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he is trying to say is that there is a
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lot of overlap between different
[398]
functions and it is very difficult to
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assign accountability to different
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people so whenever any scam is under
[404]
covered a lot of investigation takes
[405]
place lot of new metrics and guidelines
[408]
are given but nothing is followed in the
[410]
spirit per se simply because there are
[412]
lot of overlapping authorities that are
[414]
involved in terms of running a public
[415]
sector bank now third more systematic
[418]
issue is that public sector banks do not
[420]
focus on risk mitigation
[422]
they are too focused in terms of
[424]
increasing their loan books for example
[425]
right now there is a lot of celebration
[427]
oriented news at sbi that hey our loan
[429]
books have grown our profits have grown
[431]
all that is great but having so much
[433]
exposure to adani debt if you want i'll
[435]
make a separate video on adani debt let
[436]
me know in the comment box but the point
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remains it is fairly common sensical
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that if a person or a company is taking
[443]
and building entire businesses or series
[445]
of businesses purely financed through
[447]
loans then at least one bank should not
[449]
be over exposed to that particular
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conglomerate now can i show you some
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data in numbers regarding how much debt
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do adani's have from sbi and that data
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is unfortunately not released which is
[459]
very interesting and let me talk about a
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little bit by showing you this graphic
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so you can see that this is the total
[464]
write-off of amount that has been done
[466]
by sbi in different years so you can
[469]
categorically see that this number had
[471]
been going up up until financial year 19
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and 20 for example the total write-off
[476]
was roughly 46 000 crore and the total
[479]
recovery of that amount was literally
[481]
less than 10 12 percent of that now when
[483]
you go and ask banks like sbi that hey
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can you give a list of these people who
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are defaulting and not paying these
[489]
loans and whose loans are you writing
[491]
off the banks will not give you
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information but if this happens at an
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individual level if you and i take a
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loan from sbi and if we default then
[500]
banks sometimes publish our names in the
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newspaper so this is precisely what is
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written in this particular article so to
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cut the long story short in order to
[508]
manage the risk any bank should be
[509]
sensible in terms of not over exposing
[512]
itself to a particular party especially
[514]
if it is taking so much loans after
[516]
loans after loans this is very common
[518]
sensical number two you cannot question
[520]
the banks also because that list is not
[522]
released as to how much loans they have
[524]
given or written off for every single
[526]
entity so this becomes like a complex
[528]
problem to deal so let us move on to the
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third section and let me speak about the
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risks associated with sbi's loans at
[534]
least what i could find through public
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information so first and foremost we
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spoke about this chart where the
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write-offs that were done by sbi they
[541]
were rising up until 2019. then comes
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the natural question that hey what
[545]
happened in 2020 because this number
[547]
came down so something magical happened
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or did the asset quality improved the
[551]
answer is no the regulations by rbi was
[553]
changed around how to define nps so as
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for this article you can categorically
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see that rbi changed the period of
[560]
defining an npa from 90 days to 180 days
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so due to the fact that the period of
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defining npa was increased fewer npa
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defaults will happen during that period
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of time now very interestingly in 2020
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there was a mispricing risk which was
[573]
talked about by the managing director of
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sbi so here is a statement from him and
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i will read it out with you that though
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banks have tightened the underwriting
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standards surplus liquidity in the
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system may push banks to a situation
[585]
where they end up mispricing the risk so
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what does this simply mean so i am
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oversimplifying the story it simply
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means that post 2020 a lot of money was
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printed into the economy or a lot of
[595]
liquidity was brought into the economy
[597]
so banks had a lot of money to lend out
[600]
just to stimulate or re-stimulate the
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business activity this was point one
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number two the banks were mandated that
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go out and give more loans and guess
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what as point number three there were
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entities like adani's that ended up
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taking and availing more and more and
[613]
more loan from 2020 onwards so what
[616]
happened in this game was that the bank
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chairman himself has alarmed the
[620]
situation that hey the risk might go up
[622]
associated with these type of loans now
[624]
in 2022 something strange is happening
[627]
with sbi first and foremost their stock
[629]
price is skyrocketing in fact if you
[631]
check the current numbers you can
[633]
categorically see that it is trading
[635]
almost at its all-time high this is
[637]
despite the fact that if you go and
[639]
compare it to something like hdfc which
[641]
is a much much cleaner bank its stock
[643]
price is trading at roughly 20 discount
[646]
right now now you might have read a
[648]
series of positive news that bank
[649]
profits have grown revenues have grown
[651]
loan books have grown they are lending
[653]
out money more yes they are lending out
[655]
a lot of money but at what risk this is
[658]
something that no one is talking about
[659]
so fueled by all this optimism and given
[662]
the fact that when they have lent out to
[664]
businesses like adani's they themselves
[665]
have gone on to massive expansion and
[667]
everything is going well as of now so
[669]
there is nothing to worry for sbi as per
[672]
the current situation they are venturing
[673]
into more unsecured loans for the time
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being and here is an article to prove it
[677]
so what is the net net story that i am
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trying to tell you it can be understood
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through this particular flowchart so
[683]
basically the way the back end structure
[685]
is working is that banks like sbi are
[687]
being pushed to give out more and more
[689]
loans this has been happening due to
[691]
legitimate purposes because when the
[692]
covet situation was there the world was
[694]
stopping so government had to pump in a
[696]
lot of money and sbi had to lend out so
[699]
they did that there is no problem up
[700]
until this point it was necessitated but
[703]
now this is turning into a habit and
[705]
there are two outcomes that can take
[706]
place so more loans that are being given
[708]
out to end businesses if these end
[711]
businesses are able to survive and win
[713]
in the economy so sbi will keep on
[715]
getting its money and its loan book will
[717]
get strengthened in time but option 2 is
[719]
horrific that if these businesses lose
[722]
then they will default on their loan
[724]
there will be a lot of write-offs that
[726]
will be undertaken by sbi and that can
[728]
lead to very bad future for public
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sector banks so this brings me to the
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final section where i will talk about
[734]
investment related points associated
[736]
with sbi so first and foremost is sbi
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safe right now the answer is i don't
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know it is for investigation agencies to
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investigate but i as a common citizen
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can just look at the publicly available
[747]
information and can draw my own
[749]
inferences that the game that sbi is
[751]
playing right now it is a highly
[752]
dangerous game and people who are
[754]
putting their money on sbi stock they
[757]
stand a lot of money to lose in case the
[759]
situation turns bad second key point
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that will the sbi business get
[762]
completely demolished if for example
[764]
adani's business failed the answer is no
[767]
sbis loan book is huge it is a very big
[769]
bank it can absorb the shock of even is
[772]
failing in fact let me re-qualify my
[774]
statement it will not be sbi and that
[776]
will be absorbing the loss it will be
[777]
the citizens of india and do we have the
[779]
capability of absorbing such losses the
[781]
answer is yes we will be able to absorb
[783]
it so sbi will continue its operations
[786]
as it is nothing is going to change
[787]
there point number three if you are
[789]
looking to invest your money in hdfc
[791]
bank or sbi bank again i will take you
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back to that same graphic that sbi right
[796]
now is almost hitting its all-time high
[799]
the risk reward equation does not make
[801]
sense to me this is not an investment to
[803]
sell buy etc i am just simply showing
[805]
you facts if you compare it with
[806]
something like hdfc bank which is a
[808]
cleaner bank you will hardly see hdfc
[810]
getting involved in these type of murky
[812]
situations their books are clean they
[814]
are trading at roughly 20 discount
[816]
please understand how the banking
[818]
business works one part of the equation
[820]
is increasing your loan book that you
[822]
are giving more and more loans that is
[824]
great for the business as long as the
[826]
part two of the equation which is
[827]
recovering of those loans also happens
[830]
it should not happen that your loan
[831]
books are growing that these loan books
[833]
backfire after five years when the
[835]
people whom you have lent out your money
[836]
to are not able to pay you back this
[838]
brings us to the final point that akshay
[840]
you have been bullish about punjab
[842]
national bank then why such double
[843]
standards with sbi so first and foremost
[846]
point there is that i am not saying that
[847]
punjab national bank will become the
[849]
next hdfc bank it's a swing stock for me
[852]
again not a recommendation for you to go
[854]
and invest in punjab national bank or
[856]
punjab national bank nothing of that
[857]
sort i am simply trying to point the
[859]
fact that punjab national bank has been
[861]
a swing stock for me right now it is
[863]
trading at a massive discount and the
[864]
risk reward equation makes sense because
[867]
of the price at which punjab national
[868]
bank exist can some type of fraud happen
[871]
at punjab national bank also the answer
[872]
is yes can some type of fraud happen in
[875]
sbi also the answer is yes but sbi from
[878]
a pricing point of view is very very
[880]
high punjab national bank is not that
[882]
high especially if you compare its
[883]
current market price to its book value
[885]
so going forward how do i see the
[887]
situation playing out if everything is
[888]
hunky dory in the economy if the economy
[890]
keeps on doing well then adani's will
[892]
grow sbr will get his money back and
[894]
everything will be good good but on the
[896]
flip side if there are economic tremors
[898]
and if the business of adani's go under
[900]
for some reason then sbi seems to have a
[902]
very large exposure to adani debt and
[905]
that can prove disastrous for a bank
[906]
like sbi at least in the short term i
[908]
hope you enjoyed the video now i am
[910]
going to have lunch please like and
[911]
comment on this video and i will see you
[913]
soon
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