10 July 2002
BANK DEFAULTERS TWIST JASWANT'S
ARM
From Jal Khambata
NEW DELHI: The
Government is retracting the gun aimed at big industrial and business
houses who have almost emptied banks by borrowing heavily and then
refusing to pay.
Within three weeks of promulgation of an
ordinance on June 21 empowering banks and financial institutions to
seize assets of such defaulters after giving 60 days' notice, the
Government on Wednesday appeared yielding to big sharks' pressure to
promise a "relook."
The promise came from new
Finance Minister Jaswant Singh at a meeting of the Prime Minister's
Trade and Industry Council where both FICCI and CII, the apex bodies
of trade and industries, pleaded that the ordinance would hit
everybody without any distinction between the willful and non-willful
defaulters.
The Ordinance was promulgated specifically to
recover the banks' money locked in the "non-performing assets"
of the big borrowers without going through the long-drawn process of
litigation in courts as almost one-fourth of banks' money is blocked
in loans to such defaulters affecting their profitability and causing
difficulty to give loans to others.
Jaswant Singh, however,
felt no harm in readily conceding to the trade and industry's demand,
pointing out that "the government's intention is not
exproprietory" and hence he would have a relook at the ordinance
before it brought before Parliament as a Bill.
Pointing out
that all that the Government wants is that "borrower must honour
borrowings and the lender's money should go back to lender,"
Jaswant Singh said the Finance Minister's role is not that of a
"policeman" but that of "facilitator" who helps
reactivate economic recovery.
There was no problem in making
changes the trade and industry wants while moving the Bill to replace
the Ordinance, he said while pointing out that "there is a great
deal that can be done to improve" while converting any ordinance
into the Bill."
The trade and industry representatives
took the stand that they were not against penalising willful
defaulters but there should be checks and balances by providing for
appeals in the ordinance.
And, Jaswant Singh fell for this
excuse as being new in the Ministry did not have any exact idea of
provisions of the ordinance since otherwise he would have told them
that it already provides for not one but two appeals, first before
the Debts Recovery Tribunal and thereafter before the Appellate
Tribunal.
The Ordinance, The Securitisation and Reconstruction
of Financial Assets and Enforcement of Security Interest Ordinance,
had provided for setting up of securitisation and reconstruction
companies who will take over the assets in which banks' money is
blocked to help them recover loan and interest. END