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Updated: November 25, 2010 23:37 IST

Housing scam: lenders asked to check exposure

Special Correspondent
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Pranab Mukherjee
Pranab Mukherjee

A day after the CBI busted a multi-crore housing finance bribery racket and arrested a number of senior executives of some public sector banks (PSBs), financial institutions (FIs) and the CEO of a private financial services company ‘Money Matters', Finance Minister Pranab Mukherjee on Thursday directed the public lending agencies to look into their loan exposures to various companies mentioned in the application filed in court by the investigating authority.

At a review meeting with the officers of Department of Financial Services (DFS) in his ministry here to take stock of the situation, Mr. Mukherjee also directed the boards of PSBs and FIs to carry out a fresh assessment of their non-performing assets (NPAs). Apart from Money Matters, among other private companies that feature in the CBI application are: DB Realty, Pashmina Ltd, Mantri Realty, Sigrun Ltd., Entertainment World and Indore City Treasures while the officers of PSBs and FIs under the scanner belong to Bank of India, Central Bank of India, Punjab National Bank, Life Insurance Corporation (LIC) and its housing finance arm LIC Housing Finance Limited (LICHFL).

‘Isolated' instance

Maintaining that the housing finance racket, as per an initial assessment, was an “isolated” instance of “alleged illegal gratification”, a Finance Ministry statement said: “DFS also conveyed that as per information available with them, the asset quality in these cases has not been impaired”. Mr. Mukherjee noted that even as the CBI would take necessary action as per its mandate, banks and financial institutions should be instructed to take appropriate action against the erring individuals, as per established procedure.

He also asked banks and financial institutions to strengthen the monitoring and management of NPAs in their institutions so as to ensure that advance action is taken to identify incipient sickness to enable appropriate action thereon.

While directing these public lending agencies to ensure that all procedures and due diligence consistent with board approved guidelines are followed while approving loans, Mr. Mukherjee also asked the DFS, regulatory authorities and institutions to take immediate action to review and further strengthen the procedures in this regard.

Tackling corruption

Alongside, interacting with the media at a conference here, Chief Economic Advisor Kaushik Basu maintained that mere arrests would fail to solve the problem of corruption and the entire matter should be tackled in a systematic manner.

Dr. Basu said that the strategy to deal with corruption should be linked with other activities as merely sending officials to nab corrupt persons may be counter-productive “as they [officers chasing the corrupt] themselves tend to get corrupt”. To ensure that economic activities do not get affected, he said: “You have to balance between bringing economic activity to a halt and controlling corruption.”

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On the observation of Chief Economic Advisor that officers chasing the corrupt themselves tend to become corrupt: what is the sollution? Legalaise corruption? All are Rajas and no Mantris!

from:  K.S.RANGARAJAN
Posted on: Nov 26, 2010 at 03:36 IST

If the public institutions like LIC Telephones Banks are involed in corruption and fraud and their chiefs are let out, more cases will come up in the future. All the scams are in crores.Ultimately the sufferers are only the middle class people. The Supreme Court should deal firmly against this irrespective of the people the punishments should be severe and no one should indulge in such activities. Parliament should pass a bill and enforce the implementation for stingent action.

from:  C.Lakshminarasimhan
Posted on: Nov 26, 2010 at 00:49 IST
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