Congress questions RBI’s new policy to settle loans of “wilful defaulters”

Congress on Wednesday slammed the Centre after the Reserve Bank of India (RBI) introduced in a policy that enables banks and finance corporations to settle loans of accounts labeled as “wilful defaulters” by getting into into compromise settlements or technically writing off the loans.

In a tweet, Congress General secretary Jairam Ramesh requested why the centrl financial institution has modified its personal guidelines with regards to frauds. He stated, “The RBI should make clear why it has modified its personal guidelines with regards to wilful defaulters’ and afrauds’. This regardless of the All India Bank Officers’ Confederation and the All India Bank Employees Association clearly stating this transfer would “erode public belief within the banking sector, undermine the boldness of depositors, perpetuate a tradition of non-compliance and go away banks and their staff bearing the brunt of the losses.”

In his assertion, Ramesh, who’s a Rajya Sabha MP stated, “The Prime Minister (Narendra Modi) has all the time eagerly bent or modified guidelines to assist his pals in a couple of giant enterprise teams.”

“The newest instance is a clear chit to all wilful defaulters and frauds who’ve run away with public cash. On 8 June 2023, the RBI issued directions underneath a “Framework for Compromise Settlements and Technical Write-offs” that allowed banks and different monetary entities to “undertake compromise settlements or technical write-offs in respect of accounts categorised as wilful defaulters or fraud with out prejudice to the felony continuing underway in opposition to such debtors.” These accounts might be permitted to take contemporary loans after a 12-month “cooling interval”,” he stated.

He additionally cited that the All India Bank Officers’ Confederation and the All India Bank Employees Association, that symbolize 6 lakh financial institution staff, have each opposed this policy.

“They level out that ‘it won’t solely lead to erosion of public belief within the banking sector but in addition undermine the boldness of depositors’. They warn that ‘such leniency serves to perpetuate a tradition of non-compliance and ethical hazard, leaving banks and their staff bearing the brunt of the losses'”, Ramesh stated.

The Congress chief stated that the RBI is aware of properly the hazards of its transfer.

“Two years in the past, it had clearly acknowledged that wilful defaulters wouldn’t be allowed to entry capital markets or take contemporary loans. As lately as May 29, 2023, the RBI governor warned in regards to the some ways through which defaulters and fraudsters conceal the true standing of distressed loans. Will the RBI make clear if the Modi authorities has pressurised it to take this U-turn,” he questioned.

He stated that Indians have paid a excessive worth for fraud and wilful defaults.

He additionally highlighted that banks wrote off loans price 10 lakh crore between 2017-18 and 2021-22 whereas the restoration charge for these loans is an abysmal 13 per cent, which signifies that only one is being recovered out of each 8 written off.

“The high 50 wilful defaulters, an inventory headed by PM Modi’s pal Mehul Choksi, owe a considerable Rs 92,570 crore (as on 31 March 2022). Banking frauds have risen 17-fold underneath the Modi authorities, from Rs 34,993 crore in 2005-14 to Rs 5.89 lakh crore in 2015-23,” he stated.

Ramesh additional stated that trustworthy borrowers-farmers, small and medium enterprises, and middle-class salaried employees – are groaning underneath relentless EMIs.

“They are by no means given an opportunity to renegotiate their loans. Yet the Modi authorities has now supplied fraudsters and wilful defaulters corresponding to Nirav Modi, Mehul Choksi and Vijay Mallya a path to rehabilitation. While rich financiers of the BJP are given each undeserved comfort, trustworthy Indians battle to pay their loans. This reveals the true nature of this suit-boot-loot-jhoot sarkar,” he added.

(With inputs from IANS)