RBI Should Not Give Golden Handshake to Fraudsters, Wilful Defaulters: People's Commission
Loan write-offs by government-owned and private banks have shown a phenomenal increase, contrary to the government claims, said People's Commission on Public Sector and Public Services (People's Commission).
 
Opposing the Reserve Bank of India's (RBI) statement on allowing compromise settlement of loans with fraudsters and wilful defaulters the People's Commission said fraud and wilful default are criminal offences.
 
The People's Commission is a body comprising eminent academics, jurists, erstwhile administrators, trade unionists and social activists.
 
In a statement issued the People's Commission said: "Write-offs by public sector banks increased from Rs7,187 crore in 2013 to Rs119,713 crore in 2022. Among these public sector banks, the State Bank of India has in the last 10 years written off the highest total amount, at Rs297,196 crore. It is followed by Punjab National Bank at Rs92,511 crore, the Bank of Baroda at Rs75,429 crore and the Bank of India at Rs53,961 crore."
 
In the case of private banks, the total write-offs increased from Rs4,115.02 crore in 2013 to Rs53,087.03 crore in March 2022.
 
"The total write-offs by public sector banks and private sector banks in the 2021-22 financial year stands at Rs1,72,800 crore, which is much higher than the amount allocated to any of the three key social sectors namely MGNREGA, Health or Education in 2023-24," the People's Commission added.
 
Continuing further, the People's Commission said the total number of suits filed by 31 March 2023 for parties who have defaulted on loans of Rs1 crore and above is 26,086. Their total outstandings are Rs601,834 crore. Public sector banks (PSBs) filed 16,420 suits for loans amounting to Rs410,758 crore. Private banks filed 8,194 suits against parties who had defaulted on loans of Rs1 crore and more.
 
"When it comes to bank frauds, here again, the track record of the last few years is abysmal and alarming. They rose nearly 17-fold from Rs34,993 crore in the 2005-14 period to Rs5.89 lakh crore in the 2015-23 period. That is nearly a 17-fold increase," the People’s Commission said.
 
A criminal offence committed by a borrower in terms of misappropriating the funds borrowed on the basis of false statements cannot be wished away by the executive instructions issued by RBI. Such instructions are not legally sustainable. In a way, such instructions also amount to abetting criminal offences, the People’s Commission said.
 
The body has urged RBI to withdraw its circular immediately as it can issue instructions only in the larger interest of the public or in the interest of the depositors, an objective explicitly stated in the banking regulation legislation.
 
"RBI's circular being neither in the public interest nor in the depositor's interest is violative of the relevant legislation," the People’s Commission said.
 
"RBI must not become a party to giving such a golden handshake to fraudsters and wilful defaulters in the name of conferring discretionary powers on the respective banks, as it sets a wrong precedent," the statement notes.
 
Last month RBI said banks can allowed for write-offs and compromise settlements for even frauds and wilful defaulters "without prejudice to the criminal proceedings underway against such debtors."
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 
Comments
babythomasputhiyath
11 months ago
Please writeoff up to 40 lakshs homeloan and other loan because covid pandemic poor people loss their job. Thank you.
tuneer73
11 months ago
Every year crores of money are looted & the defaulters either escape or are never behind bars & the taxpayers are forced to pay from their own pockets all the looted money!
in every budget we see BJP-RSS allocating crores of rupees to PSU Banks to fill up the loss!
BJP and RSS have now created a “bad bank” or assets reconstruction company where all the unpaid loans will be transferred which will improve the balance sheet of all the banks and erase the bad loans forever!
ppl of India are so as6holes that they are not aware that all looted monies is routed to BJP-RSS as electoral bonds

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