Social News XYZ     

RBI should not give golden handshake to fraudsters, willful defaulters: People’s Commission

RBI should not give golden handshake to fraudsters, willful defaulters: People's Commission

Chennai, July 18 (SocialNews.XYZ) 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.

Opposing the Reserve Bank of India's (RBI) statement on allowing compromise settlement of loans with fraudsters and willful defaulters the People's Commission said fraud and willful default are criminal offences.

 

The People's Commission is a body comprising of 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 Rs 7,187 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 Rs 297,196 crore. It is followed by Punjab National Bank at Rs 92,511 crore, the Bank of Baroda at Rs 75,429 crore and the Bank of India at Rs 53,961 crore."

In the case of private banks, the total write-offs increased from Rs 4,115.02 crore in 2013 to Rs 53,087.03 crore in March 2022.

"The total write-offs by public sector banks and private sector banks in the 2021-22 financial year stands at Rs 1,72,800 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 March 31, 2023 for parties who have defaulted on loans of Rs 1 crore and above is 26,086. Their total outstandings are Rs 601,834 crore. Public sector banks filed 16,420 suits for loans amounting to Rs 410,758 crore. Private Banks filed 8,194 suits against parties who had defaulted on loans of Rs 1 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 Rs 34,993 crore in the 2005-14 period to Rs 5.89 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 the 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 the 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.

"The RBI must not become a party to giving such a golden handshake to fraudsters and willful defaulters in the name of conferring discretionary powers on the respective banks, as it sets a wrong precedent," the statement notes.

Last month the RBI said banks can allowed for write-offs and compromise settlements for even frauds and willful defaulters "without prejudice to the criminal proceedings underway against such debtors".

<

p style="font-weight: 400" data-mce-style="font-weight: 400;">

Source: IANS

Facebook Comments
RBI should not give golden handshake to fraudsters, willful defaulters: People's Commission

About Gopi

Gopi Adusumilli is a Programmer. He is the editor of SocialNews.XYZ and President of AGK Fire Inc.

He enjoys designing websites, developing mobile applications and publishing news articles on current events from various authenticated news sources.

When it comes to writing he likes to write about current world politics and Indian Movies. His future plans include developing SocialNews.XYZ into a News website that has no bias or judgment towards any.

He can be reached at gopi@socialnews.xyz

%d bloggers like this: