Doing some plain speaking, CBI’s director Anil Sinha said here on Wednesday that the crisis in the banking and financial system ran deep and there was a growing sense of anguish among the public that while banks were strict on retail borrowers, the big borrowers and large scale fraudsters were able to not only evade the law but enjoy the fruits of crime.
Speaking at the inaugural session of the seventh conference of CBI with Banks and Financial Institutions, Sinha alluded to the bad loan crisis facing the Indian banking industry, Sinha said: “Something indeed seriously wrong. While I fully understand that loan defaults can happen due to business risk and reasons beyond control of Banks, borrowers and regulators yet a significant part of the defaults are willful and fraudulent. What causes greater concern is that a major part of the NPAs & frauds are in large value accounts”.
“Added to this is the unduly slow & long process by which such loans and advances are red flagged, declared Non Performing Assets (NPAs), then as willful defaulters and finally as fraudulent. This whole process is so time consuming that it allows such large borrowers ample time to walk away with the funds,” the CBI director said.
“A large part of such funds move outside the country to tax havens through hawala and other unofficial channels. As a result of these limitations, investigations by CBI are grossly hampered. The accountability mechanisms in Banks and Financial Institutions are weak and diffused,” he said. “In the end, no one seems accountable. The message to the public is that rich & powerful are able to avoid consequences of cheating and fraud, while the ordinary citizens are promptly booked. This undermines faith of people in rule of law which has dangerous consequences in democracy,” Sinha said.
Citing the instances of a case Kingfisher & its erstwhile Management for allegedly defrauding banks to the tune of Rs 7,000, Sinha said: “We registered the case in July 2015, but the loans/advances were taken during 2004 to 2012. However, the banks did not file a complaint with CBI. We had to register the case on our own initiative… The undue delay in reporting such a fraud has jeopardized the cause of justice to the offenders.”