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This is with reference to “Lenders ask Lakshmi Mittal (pictured) to repay KSS Petron’s debt worth Rs 13.4 bn” (February 7). The purely ‘technical’ concept of treating a company as a separate legal entity and not touching the promoters and guarantors of loans is at the root of the NPAs problem. Going strictly by the legality of the case, the lenders may not be able to recover the amount from Mr Mittal; but it is time we get down the underlying spirit of the law. This action would also send a strong message to the hundreds of unscrupulous people who take advantage of this, blatantly siphoning funds from the quoted companies, squander funds on personal perquisites like staff at homes, cars, travel, holidays etc., drive the company into losses, let it go into liquidation and often buy it back for a song. And who suffers? The poor minority shareholders and, of course banks, which in turn would hurt their shareholders and the depositors.
There is no reason why a promoter’s — or even a guarantor’s — personal assets should not be attached in case of major defaults and their refusal to pay up when the consortium of lenders demands the return of loans from the defaulting entity. Perhaps it is time to plug the loopholes.
Krishan Kalra Gurugram
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