The Centre has called upon public sector banks to take exemplary actions against loan defaulters so that people realise that they cannot hold on to public money because bank money is also meant for the common citizen.
“The banks will now have to enforce their rights in the larger interests of the economy because if money keeps lying blocked with one section, then your capacity to lend is adversely impacted,” Union Finance Minister Arun Jaitley said on Friday at a conference organised by the office of Comptroller & Auditor General of India. “A long rope has been given to people to sort matters out and the stage is now set for banks to take effective actions in some cases so that people realise that you cannot hold on to public money because bank money is also public money.”
Public sector banks’ officials, unlike their private sector counterparts, Mr. Jaitley said, were constrained in settling the current lot of non-performing assets (NPAs) by some of the provisions of the Prevention of Corruption Act, 1988.
Since the Act was legislated three years before the liberalisation process started, the thought process that had gone in to it was of a regulated regime, he said.
“If we now closely scrutinise the provisions of that Act, it does not make a clear distinction between an erroneous decision and a corrupt decision… The corrupt decision must be punishable. The erroneous one can only give you a post-facto analysis so that the system is wiser by that analysis but may not attract criminal consequences,” he said.
