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| Death of woman entrepreneur exposes corruption in banking sector | | | Abodh Sharma
Early Times Report
JAMMU, Feb 11: Death of a woman entrepreneur on seeing the bank recovery teams at her door step in Jammu the previous day has opened the Pandora box of corruption prevalent in banking and allied sectors and irregularities in the modes of recovery of loans advanced by them. The incident is also an indication of increasing NPAs (Non Performing Assets) in the banks and the pressure on the bank staff to make the recoveries at all costs.
Sources divulge that while there is a cut throat competition within the banks to meet the targets, deep rooted nexus between banks, agents and affluent people has resulted in piling NPAs. "While the unfortunate incident involved a marginal entrepreneur who had secured a loan of paltry 1.2 lakhs for setting up a diary farm, it is the big fish who have secured huge loans by paying hefty commissions and have turned defaulters" said an office bearer of the Bank Employees' Association. "Forty odd defaulters of the State owe more than Rs 208 crores to different banks operating in Jammu and Kashmir and no one goes to their doorsteps beating drums for recovery of their debts" he added.
ET learnt that those seeking bank loans under self employment schemes are confronted by a nexus of agents and District Industries Centers through whom their cases are recommended to the banks. "There is well established system of corruption wherein a percentage has to be paid for getting the feasibility and other reports; another cut then has to be paid to the banks also" said Umesh Tagotra, an unemployed youth who aspired to start a poultry unit.
Besides, banks are known to advance huge loans in lieu of mortgaged assets of much less value in exchange of huge commissions. The association of bank employees recently published a list of major defaulters of J&K, which includes noted schools, resorts, hotels, industrial houses and 'respectable' individuals. Most of them include names which have secured huge loans from more than one bank and have defaulted in all of them, thus plundering public money, but it is astounding that no bank has gone to their premises seeking their debts beating drums to shame them.
According to the RBI guidelines for loan recovery, Customers should not be harassed or abused during the recovery process. For example, customers may be contacted only on telephone numbers provided by them and not on any other number; Calls or personal visits may be made during decent hours only; No abusive language may be used with the non-paying customer; In cases where customers default on payments, banks are obligated to inform them about the details of recovery agents hired by the bank; A repossession clause should be included in the contract; Also customers should be given prior notice of the repossession in case of non-payment. |
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