There are groups of Indian Companies who have borrowed
from dozens of banks, thousands of crores of rupees
Total NPA ( Public Sector Banks plus Private Sector
Banks ), exceed Rs 7 lakh*crores
{ A loan gets an
NPA tag if an installment remains unpaid for 90 days }
But not all loans to Indian borrowers have turned NPA ,
nor all borrowers declared " Wilful Defaulters " by RBI
Who is a " Wilful Defaulter " ?
* A borrower who
defaults in loan payment despite having capacity to pay
* Funds have not
been utilized for the purpose for which they were raised and have been diverted
* While
defaulting, the borrower has also disposed off fixed assets , immovable
property given as security , without the bank's knowledge
Just two days back, SEBI also decided :
* To bar
companies which have been declared wilful defaulter ( along with their
promoters and directors ) from accessing stock or bond markets for raising
funds
* To prohibit
such defaulters from taking board position in any listed company
* Wilful
defaulters will also be barred from taking over another listed company
No doubt , in the days to come , many more stringent
conditions will get added to bring down NPA / Wilful Defaulters
That may lead to lenders ( bankers ) getting "
Over Cautious " and simply refuse to take legitimate business risks !
So , is it not the time for the Banking System to self-regulate
through
* Refining " Lending Criteria " , and
* Defining " Wilful ( too accommodating ? )
Lenders "
Let there be no doubt that when those hundreds of
" Wilful Defaulter " cases get thoroughly probed , many a "
Skeletons in the Cupboard " , will come tumbling out !
Sadly , a witch-hunt seems inescapable !
In the process , let us not forget that " Honest
Decisions " must not be made to suffer !
If that happens , in future , no bank officer will want
to stick out his neck for fear of it getting chopped off !
Before drawing up a definition of " Wilful Lenders " , I strongly suggest that RBI
debate the following questions :
* Is there here ,
some confusion between a " Wrong " decision and a "
Dishonest " decision ?
Don't millions of honest people
continue to take decisions , which in hindsight , appear wrong ?
* Isn't a "
Dishonest " decision one which got taken , solely for the benefit of the
decision-taker ( or his family / friends etc ) ?
* Are we trying to
replace honest human " Judgment " by some rigid , hide-bound rules ?
by some computer algorithms ?
Economic progress depends upon banks lending money to
industries / businesses
It is no different anywhere else in the World
But both, Shri Raghuram Rajan and Shri Arun Jaitley are
worried about the pendulum swinging to the other extreme ! And rightly so !
A built-in mechanism for " Pre-Auditing " all
loans , could help in balancing the interests of the borrowers and the lenders
At least , introduce some sort of " Self
Certification / Declaration " by the concerned officer
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hemenparekh.in / blogs
14 March 2016
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