Herald: SAVE THE BANKING INDUSTRY

SAVE THE BANKING INDUSTRY

04 Mar 2018 06:09am IST

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By Francis Fernandes

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04 Mar 2018 06:09am IST

Report by
By Francis Fernandes

We are living in the 21st century a century of Instagram and Facebook.    In this century we have been taught in order to be successful one needs to be wealthy and real virtues like honour have become irrelevant and individuals are now defined by their financial prosperity, who is having the best makes the best in total disregard to other fellowmen or to the common man. Media the fourth pillar of the Constitution teaches us to ignore what is important and instead follow what is popular regardless of the consequences

The recent fraud of Rs 11500/ crores in the state run Punjab National Bank is a shocker to the economy of the nation and the future of the banking industry in India. The recent announcement by the Government of India it has readied a legislation to be introduced in the second half of Parliament’s budget session starting on 5th of March 2018 to confiscate and sell goods of economic offenders fleeing from the country to settle the creditor’s dues of Rs 100 crore or more.

India has a history of frauds and scams right from the time we gained Independence in 1947. It is highly regretful that such legislation was not enacted by any of the previous governments. But why is the present Government restricting to creditor’s dues of Rs 100 crore or more? Instead it should have been Rs 10 crore or more. The government has to take into account how a common man or the masses of India are affected and not how the corporate or the political society is affected. Rs 100 crore may be perfectly alright for the corporate or the political society but not for the common man. Imagine a common man who earns Rs 500/ a day, taking this as his base earnings in 40 years the common man will earn just Rs 72 lacs only, in his entire life span that is not even a crore, which is Rs100 lacs. The common man’s silence should not be taken as his weakness. In the legislation that is to be tabled in Parliament banks should be authorised to impound the passports of the borrowers. It does make a lot of sense with the help of passport the economic offenders who are in the news have managed to coolly loot the nation and make for safe heavens.

Such legislations are there in place in most countries. The economic offender is arrested and imprisoned and all his assets are confiscated by the government. Imprisonment may be up to 5 years. In serious cases the imprisonment is 10 years. Apart from imprisonment fines are levied on total amount of the fraud. In some countries it up to 10%. Countries like Germany and USA impose fine of 30% and 40%. Since most countries in the West have extradition treaties it becomes easier for the Governments to get back the economic offender.

The fraud at Punjab National Bank where the fraudster just disappeared after looting a national treasury calls for a debate for what the Government or the Finance Ministry should now be prepared to avoid such loots by the so-called decent businessmen apart from the legislation that is to be tabled in Parliament. Since the Modi Government assumed office the NPA’s were just 3.61 lac crores in December 2014.  As the figure of NPA’s has now touched Rs 10 lac crores, a section of  people including Parliamentarians have been demanding to make public the names of big defaulters but till now the Government of India has remained adamant and imposed various charges on the services rendered by the banks thereby defeating the purpose why the banks were nationalised in 1969. Defending her stand the then PM Indira Gandhi maintained banks are national treasuries and should be in the hands of the Government. Each and every Indian has a right to ask the Government as the money in the banks are people’s money. The banks are just custodians of this money which the bank managements have to make a judicious use by granting loans and making sure the liquidity of each and every loan is ensured.

The Government of India in no way should try to supersede the authority of the Governor of Reserve Bank of India. The Governor of the RBI is an intellectual and a learned person in the field of banking and economy, enjoying vast powers. During demonetisation the Finance Ministry posted a senior official in the RBI who was delegating powers as to how the currency chests had to reach to different parts of India. RBI officers and employees wrote a strong letter to the Governor of RBI stating the Institution is well established and does not require anyone to guide them. Government of India should leave the banks alone to function within the banking parameters as was the practice earlier.

Since the fraud at the PNB they have been suggestions from some quarters that the banks should be privatised. The government should thread carefully and in no way should give in to such requests or demands keeping in mind, Banks are national treasuries and should be controlled by the Government of India under the Reserve Bank of India. Globally the banks are weak and if proper steps are not initiated now by the Government of India, the banks in India may collapse sooner than expected.
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