Banking sector purge

BAD loans of Indian banks continue to surge unabated. Total non-performing assets (NPAs) have breached the Rs 10 lakh-crore mark in the quarter ending March 31. About 90 per cent of the bad loans are on the books of public sector banks (PSBs). This shows that the executives of government-run banks were more carefree in extending loans and then hung back from making serious efforts at their recovery, either due to fear or favour. It is common knowledge that ordinary citizens have to jump through endless hoops to get loans from banks while zealous bank recovery agents have attached farm equipment and tractors of farmers for missing out on one single instalment. Many rural suicides have been attributed to banks turning the screws on the indebted farmer who may owe a few thousand rupees due to circumstances out of his control. However, the passion for loan recovery deserts bank officials when it comes to rogue businessmen defalcating on loans worth billions of rupees. Vijay Mallya and Nirav Modi were even allowed to leave the country for a life of more luxury abroad.

However, it takes two to tango. Mallya and Modi are now at large but those who encouraged and facilitated the bad loans are still in the country. Strict action needs to be taken against bank executives responsible for facilitating such unscrupulous businessmen. The pile-up of over Rs 10 lakh crore in bad loans is not possible without the connivance of bankers. They should be identified and brought to book.

The recent arrest of Ravindra Marathe, the serving CEO and Managing Director of the Bank of Maharashtra, along with his predecessor Sushil Muhnot, in the alleged Rs 2,043 crore fraud by builder DS Kulkarni, should send a strong signal to the banking community. The government, the banking sector regulator and investigative agencies must adopt a zero-tolerance policy in all such cases of fraud. It is unfortunate that these agencies are often lackadaisical in investigating allegations of misappropriation involving influential and iconic bankers. One way to nail and deter the culprits is to audit every bad loan valued at Rs 100 crore and more.