Wilful Defaulters { and Wilful Lenders ? }
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
-----------------------------------------------------------------------------------------
hemenparekh.in / blogs
14 March 2016
hemen
parekh
Marol
, Mumbai , India
(
M ) +91 - 98,67,55,08,08
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