Investigation Process for Company Frauds with PSU Banks: Inputs Sought
In multiple circles, we have received posts from members which suggest that the CBI is taking a long time in acting on complaints of frauds in excess of 100 crores filed by public sector banks. Per the information submitted, it is taking up to a 1-2 years for the complaint to FIR process. If this processes is expedited, it will lead to faster systemic cleanup and eventually faster fresh loan disbursal which for the large part is at a stand still. We seek your inputs on what can be done to expedite the slow process if you are familiar with this subject. If you are not, but have additional information about this, kindly share the same.
Below are the key root causes and solutions as identified by circle members in the past to address Willful Defaults in Indian industry. Kindly review and share any additional specific inputs you have in this area.
We will soon be compiling this and submitting to key stakeholders within the Government.
Wilful Defaults - Solutions Identified by Citizens
1.Big Corporate Loans granting process must be re-engineered through process/systems upgrade, an eminent civil society member advisory board so political pressures cannot influence decisions
2.Corporate loan applications should be scrutinized properly with detailed back end checks via PAN/Income Tax/EPF/ historical banking transactions
3.PSU bank staff found to be indulging in corrupt practices should immediately be dismissed from their jobs
4.The legal formalities in case of a corporate loan default should be tightened and made more strict
5.In case of a property auction, the defaulter should be barred from buying his own property again
6.Corporates found to have used forged documents in a loan approval from the bank should be blacklisted
7.The coordination between the loan approval and loan recovery department should be improved
8.Officers responsible for approving corporate loans should be well qualified and should be acquainted with the working of businesses models
9.The RBI should lay down a strict time limit for NPA recovery
10.Large loans should be scrutinized by independent auditors
11.The clubbing provision under central excise law is very meaningful.it has to be applied so that such NPA accounts do not misuse banks funds and circulate them for their fraudulent purposes
12.Wilful defaulters should not be allowed to contest in elections
13.Special courts could be constituted for NPA recovery.
Wilful Defaults – Root Causes
1.Banks do not scrutinize big names enough before giving loans
2.Political leaders recommend sanction of loans irrespective of the firm's inability to repay because of cash/kind favours received by them
3.PSU Bank staff is influenced in many ways including power, bribes, promotions, favours in kind, etc to sanction the loan
4.The rules for passing loans to corporate bodies is different from those for an individual
5.Political parties have a lion's share in the loans sanctioned to various corporate houses in the country through declaration of sick industry
6.Borrowers are very clever/confident and have no fear of being caught
7.The present slow legal formalities in case of a corporate loan default is a long drawn process
8.Even if the defaulter’s property is auctioned, he can still purchase the same in benami again, at a rock bottom price
9.The bank loan departments overlook important facts while approving loans just so that their targets are met
10.Forged documents are used to apply for loans
11.There is a nexus between officers and borrower
12.No single point of contact for Loan and Recovery; they are separate departments in banks. more
Below are the key root causes and solutions as identified by circle members in the past to address Willful Defaults in Indian industry. Kindly review and share any additional specific inputs you have in this area.
We will soon be compiling this and submitting to key stakeholders within the Government.
Wilful Defaults - Solutions Identified by Citizens
1.Big Corporate Loans granting process must be re-engineered through process/systems upgrade, an eminent civil society member advisory board so political pressures cannot influence decisions
2.Corporate loan applications should be scrutinized properly with detailed back end checks via PAN/Income Tax/EPF/ historical banking transactions
3.PSU bank staff found to be indulging in corrupt practices should immediately be dismissed from their jobs
4.The legal formalities in case of a corporate loan default should be tightened and made more strict
5.In case of a property auction, the defaulter should be barred from buying his own property again
6.Corporates found to have used forged documents in a loan approval from the bank should be blacklisted
7.The coordination between the loan approval and loan recovery department should be improved
8.Officers responsible for approving corporate loans should be well qualified and should be acquainted with the working of businesses models
9.The RBI should lay down a strict time limit for NPA recovery
10.Large loans should be scrutinized by independent auditors
11.The clubbing provision under central excise law is very meaningful.it has to be applied so that such NPA accounts do not misuse banks funds and circulate them for their fraudulent purposes
12.Wilful defaulters should not be allowed to contest in elections
13.Special courts could be constituted for NPA recovery.
Wilful Defaults – Root Causes
1.Banks do not scrutinize big names enough before giving loans
2.Political leaders recommend sanction of loans irrespective of the firm's inability to repay because of cash/kind favours received by them
3.PSU Bank staff is influenced in many ways including power, bribes, promotions, favours in kind, etc to sanction the loan
4.The rules for passing loans to corporate bodies is different from those for an individual
5.Political parties have a lion's share in the loans sanctioned to various corporate houses in the country through declaration of sick industry
6.Borrowers are very clever/confident and have no fear of being caught
7.The present slow legal formalities in case of a corporate loan default is a long drawn process
8.Even if the defaulter’s property is auctioned, he can still purchase the same in benami again, at a rock bottom price
9.The bank loan departments overlook important facts while approving loans just so that their targets are met
10.Forged documents are used to apply for loans
11.There is a nexus between officers and borrower
12.No single point of contact for Loan and Recovery; they are separate departments in banks. more
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Increase FD interest rates three rounds 50 basis points each, to consolidate gains. Economy will improve.. more
Nov 29
There are thousands of ex-bureaucrats in private industry using their influence, by working and shielding private industry and delaying inquiry. Case in point: DHFL. more
Nov 29
CBI investigations must be made transparent and stages of investigations must be made known to public once in two months in the internet./web. This will reduce the delays caused unnecessarily. more
Nov 23
If the reasons are known for delay in the process from complaint to FIR, solutions can be discussed. Generally court cases are delayed because of unlimited number of adjournments/postings/ Dates/ Taariqs. If the number of postings are restricted to Genuine reasons, these dates will reduce and more cases will be decided. For example For busy schedule of the advocate, case is postponed. This can be reduced to some minimum number and after that no adjournments on that reason. That will give chance to lesser known advocates to work and reduce monopoly. Similarly in this case too there may be some reasons which can be minimised and progress can be accelerated. May be few officers are over burdened and others have no work. PL LIST THE HURDLES, THEY CAN BE DISCUSSED AND SOLUTIONS CAN BE FOUND. more
Nov 22
For small loans, there is pressure on Banks to sanction and meet the target. Most of such small loans goes to overdue and ultimately renewed or rephased. Finally, the loans goes bad and written off from Banks profits. Alternatively, big loans are sanctioned with political influence and most of the loans in the short period or long period also goes bads. There is no rule to recover the loan without goes to the court, where it takes years to get the order. As a whole, the public money is always at risk due to government policies. more
Nov 12
