oppn parties All Lending Decisions Cannot Be Put Under The Scanner

News Snippets

  • Kapil Sibal leaves Congress, fills nomination for Rajya Sabha with SPs backing
  • RBI bans 5 NBFCs as it cracks down on e-lending platforms
  • Hindustan Motors to tie-up with Peugeot to bring out a redesigned version of the iconic Ambassador
  • GST Council to defer rate rejig due to inflation
  • Centre to sell 29.5% in Hindustan Zinc at an expected price of Rs 38000cr
  • Stocks remain negative on Wednesday: Sensex loses 303 points to 53749 and Nifty 99 to 16025
  • IPL: RCB beat LSG by 14 runs and end their dream run. Rajat Patidar scores a brilliant 112. RCB will take on RR to decide who goes through to the finals
  • Delhi Additional district judge Nikhil Chopra says there is no legal right for people seeking to worship deity inside Qutab Minar, says it survived 800 years without worship so "let it survive like that"
  • Punjab chief minister Bhagwant Mann sacks state health minister Vijay Singla over corruption charges. Singla was later arrested by the ACB
  • Protestors burn the house of Andhra minister P Viswaroop and MLA Satish Kumar over renaming of Konaseema district as B R Amberdkar Konaseema
  • Gyanvapi: Varanasi district judge decides to first hear the 'maintainability' plea filed by mosque management
  • Delhivery and Venus Pipes shares list at premium of 10% and 8.7% respectively even when market sentiment was down
  • In a bid to cool edible oil prices, Centre allows duty-free imports of 20 lakh tonnes each of crude sunflower oil and crude palm oil per annum this year and next
  • Centre caps sugar exports to ensure availability of stocks in the domestic markets to cool prices
  • Stock markets get the jitters as RBI signals rate hike and government moves in to control inflation: Sensex tumbles by 236 points to 54052 and Nifty goes down by 89 points to 16125
Yasin Malik of JKLF gets two life terms in terror funding case /////// Kashmir TV artist killed and her nephew injured in a terror attack in Hushroo in Budgam district
oppn parties
All Lending Decisions Cannot Be Put Under The Scanner

By Ashwini Agarwal
First publised on 2022-01-11 05:19:53

The decision of the Central Vigilance Commission (CVC) to amend rules to minimize CBI intervention in alleged bank fraud cases is welcome. Specifically, the CVC has said that an expert panel will recommend whether a CBI inquiry is required in bad loans above Rs 3cr (previously Rs 50cr).

Any transaction where money is lent by a bank to a customer is always open to charges of corruption and kickbacks. In many high profile cases this has actually happened. But most loan transactions are through informed decisions by bankers who look at the customer profile, credit ranking, worth of project submitted, past record of loans to similar projects, future prospects of the project and, of course, government policy, among other things, to grant the loan. It is a many layered process and involves various departments of the bank.

Thus, when a loan goes bad, it is not correct to approach the issue as something that involves corruption. There are a host of factors that can turn a loan bad. But such is the buzz around bad loans now that bank officials are easy target. This is taking a huge toll on the economy as banks turn risk averse despite being flush with funds.

The government must reduce the trust deficit and the CVC decision is a good step in that direction. Bankers have also asked it to have a 'sunset' period for investigations, subject to conditions. This is also something that can be looked into. The government will have to create a system where bankers can lend to industry without the sword of an extra regulatory layer in the form of investigating agencies questioning their motives hangs over their necks.

Since the government has declared its intension of remaining in the financial sector and since PSBs will continue to remain the backbone of financing to industry, the earlier this issue is resolved the better for the economy. Otherwise, we will continue to have situations where despite being flush with funds, banks will not lend by simply saying that quality projects are not coming up. That is just a cover as they cannot openly say that they are afraid their decisions will be questioned later.