Sunday, June 13, 2021
HomeOpinionDiaryNeed regulation and structural change in financial systems – Part I

Need regulation and structural change in financial systems – Part I

A regulatory filing to the stock exchanges by Punjab National Bank has blown the lid off a Rs 11,500-crore fraud. Perhaps the largest such scam in India, it was perpetrated by a maverick diamond merchant in collusion with bank officials at a single branch in South Mumbai. For India’s second largest bank to be defrauded in the manner suggested is astounding, especially since there has been heightened scrutiny of public sector banks’ operations in the last few years. The bank’s audit committees and boards, as well as the central bank, which conducts routine financial inspections of banks’ books, have been ostensibly keeping a close watch on the loans that have turned substandard or are on the verge of default.

Yet another scandal in the public sector banks! How much more of these would be needed to wake the government from its slumber? It won’t be a surprise if these culprits escape due to loophole around the present banking law system. A precedent should be set by punishing all the involved individuals and attaching and selling every single property they own.

Time and again, select borrowers (with the connivance of a select few) seem to take the banking system and public funds for a ride. All these while taxpayer-funded bailout or recapitalisation is called for. We, as citizens, need to start asking tough questions on why this sorry state of affairs has become the norm, and demand tougher action against banks and errant borrowers, as well as better regulatory governance by the banking regulator and structural banking reforms in the longer run. There is simply no other way out of this mess. Common man will face jail for few thousand of rupees but big fish will escape wilt legal loop holes for fraud committed and escape to go out of India.

Banks are ready give any amount of money to cheats. When a genuine common man approaches for a house loan, the bank officials show him hell on earth. Recently, a bank official said that they will go in detail in case of a common man. If it is a rich man, they will be liberal shameful, the people’s more educated and more critical to their duties are engaged in corruption. India cannot erode corruptions till these financial organisations are not regulated properly. Loans, big, medium or small, once sanctioned and paid means there is a scam in that level in which from the peon to the manager — all are involved. Perhaps this is only the tip of the iceberg.

(This is the first part of the article and the remaining portion will continue tomorrow)

(The views expressed by the author in the article are his/her own.)

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