Minimizing Wilful Defaults - Solution Inputs

Below are some of the key root causes as idnetified by you for Wilful Defaults and as a result rising NPAs at PSU banks and loss of tax payer money in India. Kindly review them and help identify specific solutions to these issues. We will compile them and submit to Minsitry of Finance and other stakeholders for actions.

We look forward to your inputs!

Wilful Defaulters – Root Causes

1. Banks do not scrutinize big names enough before giving loans
2. Political leaders recommend sanction of loans irrespective of the firms 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 wile 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 81 comments Below 81 comments
It is very clear now who has the maximum loans..Identify top 500 people with maximum loan and keep a watch on them..Please try to get security from them in case they have not provided till now.If some of these go for a default,their property can be sold to recover the debt more  
Our system/Banks/Govt are all so lenient on big borrowers/defaulters. Take no action to recover. Start crying when it is too late. Mallya like people freely enjoying life and roaming in abroad. more  
In our Bharat BRB(RBI) is the controlling authority and policy maker. It conducts interim/regular/surprise inspections - especially all the head offices of the banks/FIs. Such being the case is RBI not responsible to assess the creditworthiness of big borrowers availing consortium loans/multiple loans? Why not RBI is giving alarm signals to banks and finance ministry when the appointment of CEO/MD/ED is done by the FM and all the big loans are approved/sanctioned by boards of banks where one of the directors represents RBI? When the loans become sticky/bad only the Financing Banks are brought to light and not the RBI. more  
There is leniency towards the influential businessmen when it comes to recovery of their loan (a. la 9,000 Cr). These are wilful defaulters (who are taking loans and enjoying at the cost of the tax payer's money). Sentence them to Rigorous imprisonment and attach all their assets. Do it for a couple of them and the others will fall in line. more  
Bank loans should be sanctioned strictly on financial merit without fear or favour. The sanctioning authority should be held responsible for sanctioning or denying a loan and his role be scrutinised by a bank ombudsman. more  
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