Scheme does not offer provision to verify credentials of private financiers.
The complete onus of disbursing and recovering the loans to be sanctioned under the proposed Wrina Mukthi or debt swap scheme to support the victims of private moneylenders is likely to be on the bank managers.
A sub-committee of the State Level Bankers Committee (SLBC), which worked out the scheme, has not reportedly considered the issues involved in sanctioning loans to private financiers without verifying their profile or the purposes for which they had advanced the loans.
Banking sector sources told The Hindu here on Friday that instead of releasing the funds through Real Time Gross Settlement (RTGS) system, it has been proposed to give financial assistance to the debtors through demand drafts against the recommendations given by secretaries of local self-government institutions.
This was against the system in vogue in banks for releasing loans. The disbursing authorities usually verify the profile of the debtors and also that of the institutions to which the funds are transferred.No need for PAN
This applies even in the case of even minor loans. As per the draft proposal cleared by the SLBC sub-committee, before sanctioning the loans, the bank managers need not even seek the Permanent Account Number (PAN) or the bank account details of the private creditors. Hence, they may be taken to task for their lapse in recovering the loans in future.
No system has been envisaged so far to bring the private lenders under the purview of the Income Tax Act or assess their net worth as per the provisions of the Wealth Tax Act.
The source of income of the money lenders and also whether the funds were given to individuals for legitimate purposes too will have to be traced.
But for a mention that the lending bank reserves the right to take legal action against those failing to repay the loans, adequate precautionary measures have not been incorporated in the scheme for ensuring repayment and also insulating the borrowers from straying into such practices again, sources said.
The lead banks will only have a supervisory role in recovering the non-performing assets (NPAs) and the responsibility for sanctioning and recovering the loans will vest completely on the managers, the sources said.