Money & Banking

SBI policy on wilful defaulters lauded

Our Bureau Thiruvananthapuram | Updated on August 05, 2019 Published on August 05, 2019

Bank employees have welcomed State of Bank India’s (SBI) new policy on wilful defaulters, saying their strong stance on the issue has been vindicated at a time when it had threatened to go out of hand.

Cases of wilful defaults have increased in recent times, especially during the last five years, said A Raghavan, Joint Secretary, National Confederation of Bank Employees (NCBE).

Even Finance Minister Nirmala Sitharaman had taken exception to the issue in Parliament. The number of wilful defaulters went up from 5,349 to 8,582 in five years since 2014, the FM had told the Lok Sabha on June 24.

“Given this (number), it is welcome that concrete steps are getting formulated to address the menace, which has economic as well as social implications, ” Raghavan said.

Steps/tests formulated in the new policy to determine a ‘wilful default’ appear to be transparent, as the person/entity in question gets all rights as a borrower to present his/its case before various committees.

Previous provisions

One could, however, argue that facilities allowed under an RBI master circular of July 1, 2013, are not available any more. For instance, there was a provision for personal hearing before the Grievance Redressal Committee headed by the Chairman/MD of the bank prior to an entity being classified a ‘wilful defaulter,’ Raghavan said.

In a similar vein, not allowing a time of 15 days for making a representation against the preliminary decisions of the first committee may be argued as denial of natural justice.

“These may be considered favourably, as has been directed by Justice RF Nariman in his judgment in the Civil Appeal 4776 of 2019 before the Supreme Court on May 8 this year,” said Raghavan. It is however, important that the real culprits and financial offenders are booked and treated as criminal offenders, and whatever possible assets be recovered from them.

“It is pertinent here to point out that during 2014-2019 alone, public sector banks had together made an operating profit of ₹7.17-lakh crore. But the entire profit, plus an additional ₹40,192 crore from reserves totalling ₹7.58-lakh crore, was provided for NPAs,” he said.

“Even the wage revision for bank employees, due from November 2017, has been withheld on account of this despite, bankers having worked really hard for the success of government projects,” he added.

Published on August 05, 2019
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