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THE WILFUL DEFAULTERS THAT RBI CONCEALS

Akhilesh Bhargava

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RBI

The giant-sized loans of tens of thousands of crores, given by banks to the most unworthy/undeserving borrowers and the soft kid-glove treatment given to them, when they deliberately defaulted, has always been shrouded in inexplicable secrecy. Bankers have been unwilling to reveal their names. Even when these powerful borrowers were found to be wilful defaulters, the bankers were unwilling to take any coercive recovery action and strangely, they were also unwilling to disclose their names. The reasons for such secretive behaviour were obvious. These scammy big ticket borrowers were the most influential, with direct access to the powers that be, in the topmost circles of Indian politics and bureaucracy. Thus, instead of naming them and taking stringent corrective action, the bankers continued to hide these frauds under the carpet, by frivolously restructuring bank loans, which had turned bad. Not only were these influential borrowers given extra time to repay, with interest rate cuts, but they were also given additional loans, as ‘rewards’ for their payment default. This entire exercise, starting from giving of the loan to its bogus restructuring, reeked of favouritism and corruption, in which these unnamed wilful defaulters, merrily had a free run below the radar.

This changed when then Reserve Bank governor Raghuram Rajan decided that enough is enough. It is clear that the RBI too had adopted a lax attitude by permitting multiple restructurings of the same account under various schemes viz. SDR, CDR, S4A etc., which helped the bankers to window dress and hide the bad loans. It was much later in the day ie. in October 2015, that Rajan insisted that banks must recognise the bad loans/NPA accounts and must provide for the losses, under an Asset Quality Review (AQR). It was perhaps that this AQR revealed alarming names and amounts, that Rajan thought it prudent to warn the PMO of the NPA crisis and also reported names of the ten biggest wilful defaulters, who had duped the banking system. It was certain that this contained names of the most powerful and politically well-connected persons, whose disclosure would not just shake the system, but would also point out the names of the powerful netas/babus, under whose patronage the banks were cheated in this manner.

Transparency and good governance demanded the disclosure of the list of these top ten fraudsters to the public, but neither the PMO nor the RBI chose to do so. And this explosive list would have remained hidden for eternity, in the secret files of the RBI and the PMO, had Rajan not mentioned it in his written testimony on the NPA crisis before the Parliamentary Committee headed by Murli Manohar Joshi.

Despite an RTI application, the RBI strangely refuses to disclose this list that Rajan had sent to the PMO. The CIC has pulled up the RBI and has directed the RBI to disclose the names of these fraudsters, within 45 days, as was ordered by the Supreme Court in its 2015 judgement. The CIC found the RBI’s stand to be absurd, reflecting an anti farmer, pro rich bias of bankers. The CIC’s ire is understandable. The nation has lost lacs of crores to influential wilful defaulters, who have cheated the system. They are dangerous white collar criminals who manipulate and subvert the system to loot it and there is simply no justification to not reveal their names. They need to be named, shamed and punished.

 

Business Tit-Bits

The insider of the Monetary Policy Committee meeting of the RBI

Akhilesh Bhargava

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The recent meeting of the Monetary Policy Committee of the Reserve Bank, took place with a much better macro economic environment. Crude oil prices have fallen sharply, the rupee has started gaining strength, capital inflows are increasing, there is a pick up in investment activity led by the government, there is an increase in capacity utilisation, a rise in exports, an improvement in credit off take, inflation remains subdued and with a retreat in commodity prices, corporate profits should look upwards. What happened in the meeting? Mr. Akhilesh Bhargava, Business Editor of HW Business and Finance shares his insights on the matter.

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Business Tit-Bits

An insider into the murky affairs of the Sun Pharma

Anusha Bhattacharya

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Among the large corporates in India, Sun Pharmaceuticals Ltd., India’s biggest pharma company, stood out as a relatively clean organisation, whose grounded/down to earth billionaire promoter Dilip Shanghvi was richer than even Mukesh Ambani, though for a brief period, in 2015. Sun Pharma and its promoters were often awarded and feted for their industry leadership and business acumen, and were also respected for their business integrity. But there’s more to it. Mr. Akhilesh Bhargava, Business Editor of HW Business and Finance shares the complete story of the murky affairs of Sun Pharma

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Business Tit-Bits

Why is audit India’s weak link?

Akhilesh Bhargava

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In an interesting and candid recent speech on corporate governance in India, Uday Kotakspoke about what ails corporate governance in India. He said that there are six layers of corporate governance in our system, including the company management, its board of directors, rating agencies, auditors and regulators. He remarked that of late, these six layers have not been doing their job and that, their performance has not been satisfactory. He lamented that auditors are one of the weakest links plaguing this corporate governance architecture in India. Why is it that the audit is India’s weak link? Mr. Akhilesh Bhargava, Business Editor of HW Business and Finance shares his insights on the matter.

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