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 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  

View all 112 comments Below 112 comments
Increase FD interest rates three rounds 50 basis points each, to consolidate gains.
Economy will improve.. more  
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  
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  
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.
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  
Post a Comment

Related Posts

    • Coronavirus - Pandemic and India's situation

      Next flight from Wuhan to India is coming tomorrow. Italy and South Korea are seeing Coronavirus spread like fire. South Core has 890 cases as of this morning. last week tuesday was zero. italy is ...

      By Harsimran Kaur
    • US-India trade arrangement on Medical Devices: What People Want...

      The subject of how medical devices should be priced in India so they can be affordable and yet premium medical devices are also available to those who want them has been discussed in this circle si...

      By LocalCircles Manager
    • Electric Vehicles: How should India proceed

      Many of you participated in the Electric Vehicles survey in the circle last week. Below is the full survey report: Will India mo...

      By LocalCircles Manager
    • Do online OTT/streaming platforms need content regulation

      Recently some members raised the issue of lots of objectionable content and language being used in movies and more so in video series run by sites/apps like Netflix, Amazon Prime, Hotstar, etc. Con...

      By LocalCircles Manager
    • India’s Healthcare Capacity and Coronavirus

      Coronovirus statistics have a tipping point that media is missing. What happens when the number of infected start overwhelming state capacity for healthcare? We need to have discussions...

      By Shikha Jain
    • Reducing Middle Men and Agents in State Government Offices

      Many of you who have been in the circle since 2014 know how LocalCircles has been advocating introduction of systems and elimination if middlemen, agents, consultants at Citizen & Business interfac...

      By LocalCircles Manager
    • Educated are leaving India

      Montek Singh Ahluwalia, in his non-memoir, Backstage: The Story behind India’s High Growth Years, recounts how he and wife, Isher, decided to return to India from Washington 40 years ago, giv...

      By Sudesh Rai
    • Pharma Companies most Corrupt entities in India

      Not only these companies keep paying bribes to doctors and hospitals, they have zero conscience. They want to loot the Govt and in essence the common tax payer by claiming a tax deduction for the b...

      By Amit Mishra
    • Judiciary to Save Constitution and Protect

      Judiciary to realize and ensure Preamble Guarantees to Citizens AS LONG AS TRAITORS AND BETRAYALS guarded with Rights of Liberties, as long as Anti Nationals SHELTERED, as long as SEPARATISTS ...

      By Csn Sarma

      Coronaviruses originate in animals — like camels, civets and bats — and are usually not transmissible to humans. There have been other ones originating from other animals and birds also...

      By Jayakumar Daniel
    • Pricing of Medical Devices - Way Forward

      Many of you who have been in the circle since 2017 know that LocalCircles has been instrumental in escalating the issue or price capping so medical devices become affordable for the common citizen ...

      By LocalCircles Manager
Enter your email & mobile number and we will send you the instructions

Note - The email can sometime gets delivered to the spam folder, so the instruction will be send to your mobile as well

Please select a Circle that you want people to invite to.
Invite to
(Maximum 500 email ids allowed.)