The CBI arrested former IDBI Bank Chairmanand four of his erstwhile colleagues, besides the then Kingfisher Airlines CFO and three other former functionaries of the airline, in connection with the Rs 900-crore loan default case.
The arrests by the CBI are worth noting for timing, intent and implications. The agency is investigating these officials on charges of facilitating a Rs 900-crore loan without due diligence.
What did Mr.Mallya do?
Mr. Mallya owes banks close to Rs 9,000 crore and has been in exile in the U.K. for nearly a year, even as his lenders have scrambled to recover their dues, with little success.
Last week, after a three-year-long trial, the Debt Recovery Tribunal allowed a consortium of 17 banks to recover from Mr. Mallya and his companies outstanding dues of Rs 6,200-odd crore plus interest related to the airline’s operations.
What is the current status of NPAs?
Amidst the rising pile of non-performing assets (NPAs) in government-owned banks,wilful defaulters were said to be responsible for around Rs 77,000 crore of bad debts by July 2016.
What needs to be done?
Breaking the banker-borrower nexus is just as critical for safeguarding public money as is acting against corrupt administrators, but a timely and transparent system is needed to ensure that bankers don’t turn wary of extending credit at the slightest hint of risk.
The fear of investigative agencies and adverse audit reports was blamed for the so-called policy paralysis in the UPA’s second term.
PM Modi had, early in his term, urged officers to take bold decisions without fear of retribution and promised to stand by them for decisions taken in good earnest.
That promise requires making some necessary amendments to the Prevention of Corruption Act, particularly the much-too-broad and subjective Section 13(1)(d) that has resulted in many an honest officer being chargesheeted for the corruption of others.
If there is malfeasance involved in the IDBI loan, action must be swift and exemplary — but to ensure circulation of credit, systems must also be put in place to reassure bankers against random witch-hunts.
Category: Mains | GS – II & IV | Corporate Governance
