In Novemeber 2014, I wrote a blog following up the then Governor RBI's comments on some Indian businessmen's propensity to cheat the banks from whom they have taken loans giving rise to stressed assets , popularly called Non Performing Assets(NPAs)
The new dispensation in the governance of the country since 2014 has attributed the NPAs of nationalised banks (estimated around Rs. 6,41,057 crores in 2017 or Gross NPA ratio of 12.47 of total assets), mainly to the lapses of the banks' management in not enforcing the recovery of loans sanctioned to big business houses allegedly on the directions of the previous governments, even as some major defaulters of bank loans have fled the country after 2014 !.
The latest is the fraud on Punjab National Bank to the tune of about Rs.11,300 crore by a big business house in the diamond trade, whose kingpin too has bolted away. These cases perhaps demonstrate how it is easy to commit fraud in India, as much easy as it is for doing business in India !
Spokespersons and analysts say that the fraud on PNB is due to systemic failure.Any system, however perfectly designed, will ultimately involve human interaction in operating it and that in the case of a massive financial fraud like this, it can not be just a single individual within or outside the organisation.
Our methods of investigation and legal action to book the culprits are prone to long delays and appeals, whereas in cases like financial frauds the conviction has to be quick and salutary.
To solve the NPA problem the present government is proposing to enact the Financial Resolution and Deposit Insurance Bill to enable the recapitalisation of banks to mitigate the NPAs. However, some provisions of this Bill are said to compromise the interests of the depositors and give the government absolute power in deciding the the fate of the banks if they go under.
The path to becoming a strong global economic power is not going to be easy with unscrupulous elements
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