Letters: Banks need a 'statement'

This refers to the report "Banks in no hurry to declare wilful defaulters". Many complex issues and legal challenges will emerge - when banks classify a non-performing asset (NPA) account as a wilful defaulter - despite the fact that the classification is strictly in compliance with the guidelines issued by the Reserve Bank of India. Legal battles are inevitable, even when banks use other tools for the recovery of defaulted loans. In many cases, legal issues are raised to deliberately delay the repayment to the bank.

At a time when NPAs are mounting and the recoveries are keeping up with the increase in defaults, banks should ensure that no wrong signals go out.

Well-monitored accounts will remain under control and send a message that banks are watching. It will prevent borrowers from committing acts that are detrimental to the interest of the banks.

Banks should give out signals that they are capable in terms of the power vested with them to recover their money.

V S K Pillai Kottayam

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