Financial Daily from THE HINDU group of publications
Tuesday, Dec 03, 2002
Financial Daily from THE HINDU group of publications Tuesday, Dec 03, 2002 |
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Opinion
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Letters Recovery of dues
Parliament has passed the Securities Bill, which will pave the way for quicker recovery of dues by banks and financial institutions. This move was long overdue, with NPAs, aggregating more than Rs 1 lakh crore threatening to overwhelm the country's financial edifice. The Bill was, however, not passed ungrudgingly. There are still concerns on borrowers' rights, and possible misuse of the provision. The history of banking in India is a lesson on how to worst the system, with or without political connivance. Loan melas, laws tilted in favour of delinquents, corrupt bank officials and buccaneer borrowers, all wrecked the system. Bank managers refusing to lend, for fear of being hauled over the coals subsequently when the loan sours, is a recent development. Borrowers who knew how to tweak the system worked it to their advantage. The point is there is no need for a separate legislation protecting borrowers' rights because that would pit the two laws — one in favour of the lenders and the other in favour of borrowers — in an unseemly and protracted legal battle. A financial institution will not pull out of a project deliberately. And, even assuming this happens, the borrower can invoke the arbitration clause, if any, or approach the Courts. Any attempt to project the interests of borrowers as more important than those of lenders will give a leg up to the former. Let us not repeat the folly of SICA in the name of placating the incorrigible borrowers because even our first flirtation with a law that was soft on borrowers ended up as a tragedy for the financial sector. If Parliament is bent on coming up with a law to protect the so-called borrowers' rights, let the law also spell out their duties and make the diversion of funds for self-aggrandisement punishable. S. Murlidharan New Delhi
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