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Letter to BS: Bank recapitalisation no different from farm loan waiver

The loan frauds that led to a rise in the bad asset is the result of improper and ineffective systems

Business Standard 

Cash, bank | Illustration: Ajay Mohanty
Representative image

This refers to “no different from farm loan waiver” (December 24). The of state-owned banks and are at the cost the exchequer. The infusion of capital in the capital deficient government-owned banks without reforming the working and set-up of the banks is nothing but pushing good money after bad assets. The reforms executed in the banking sector are yet to yield intended results.

The loan frauds that led to a rise in the bad asset is the result of improper and ineffective systems that paved the way for dishonest banking personnel to commit frauds. Some decision-making authorities were hand in glove with the unscrupulous borrowers and had violated the norms to benefit the borrower. The lacunae in the system either delayed detection or failed to fix accountability that consequently turned the amount involved irrecoverable. Delayed or inadequate punitive action by the lender against the staff and borrower is sending the wrong message that banks are incapable of recovering the money and punishing the culprits.


V S K Pillai, Kottayam

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First Published: Tue, December 25 2018. 23:06 IST
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