Rbi Interference

As payments for his supplies were not received, he could not repay the banks dues. As this continued, the unit was closed after sometime. There was a large balance outstanding to the bank.

Though he suffered losses, the borrower offered to settle the bank dues and requested for interest concession. He offered to pay the principal amount outstanding as on the date of closure of the unit but the bank insisted for 12 per cent interest from the above date stating that as per RBI directions, the bank has a recovery policy by which any SSI unit will have to pay at least 12 per cent interest.

This is in spite of the fact that the concerned branch manager agreed that the borrower could be given interest concession due to his business loss but for RBI insistence for recovery policy by banks.

In fact, the bank which I am referring to is already in deep difficulties and they are now not able to recover mostly due to unnecessary RBI interference.

It is advisable if RBI stops interference even on such matters directing the banks to have policies on such matters.

P S Rangarajan Chennai