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Big Defaulters Are Favoured

Economic inequality is written largely in bold letters all over the Indian economy and society. It manifests in innumerable forms, which even includes the treatment of wilful defaulters of bank loans. A wilful default in the repayment of a loan is a crime, irrespective of its size, but there is a major difference in the treatment of a small defaulter versus a big one. A small trader/farmer who defaults in payment of a bank loan is quickly blacklisted/ostracised by society and is banned forever by banks, for his failure to repay a small bank loan, often due to the most genuine and unfortunate reasons. Such a poor defaulter is a puny/small entity against the mighty banks and is in no position to explain his case or defend himself from being held a wilful defaulter. For a default in repaying a bank loan, generally of a few lacs, at the most, and unable to defend himself, he is banned from the banking system for life.

The case of a privileged big borrower is entirely different. While a small defaulter is meted out big punishment, a big one gets away with small, or simply no punishment. He borrows hundreds of thousands of crores from the banking system, without being subjected to appropriate due diligence, siphons the money through blatant frauds, has the connivance of the bankers and auditors and in the process, other stakeholders like shareholders, vendors and suppliers too are trapped in his debt trap, while he remains a rich/influential business tycoon. His company that borrowed, on the other hand, is rendered poor and bankrupt. This fatcat borrower has a battery of top lawyers, accountants and consultants to guide/defend him and the system too supports him in every possible manner, by way of fresh loans, restructuring etc., to avert a default, which is anyway inevitable in such cases.

Thereafter, most banks very reluctantly initiate proceedings to declare such a big criminal borrower as a wilful defaulter, which too often fails, because this rich borrower has all the resources to drag the banks to courts and stops these proceedings. And if all this fails, the big borrower, rather looter, easily scoots away to the safe climes of London, Belgium, Antigua etc. to enjoy the proceeds of his gigantic loot. The irony is that while the small ones are quickly named and shamed, the big ones who must be, are not.

The CIC, taking cognizance of this glaring inequality has pointed out that while the defaulters of small amounts like farmers are defamed in public, the defaulters of Rs.50 crores and above, are given a long rope. He said that the defaulters of over Rs.50 crores were given high concessions in the name of one time settlements, interest waivers, several other privileges and their names are hidden from exposure to secure their reputation. He said that on the other hand, over 30000 poor farmers have committed suicide unable to bear the shame of not paying their loan. He pithily said that these farmers lived and died in the agricultural fields believing in mother earth, but did not leave their motherland like the 7000 rich, educated corporate industrialists, who cheated the nation by evading thousands of crores. He thus directed the RBI to provide information to the public about such borrowers, their criminal misdeeds and the reasons for not initiating criminal action against them.

It is these big defaulters who have fraudulently enriched themselves and have impoverished banks and companies. It is they who have cold-bloodedly cheated the public and the government for unimaginable sums. But it is the poor farmer who kills himself in shame, while the big defaulters vanish and kill the public faith in the system.

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