By Prabhakar Kulkarni*
Since the disclosure of the Punjab National Bank fraud, banks and their transactions are in focus of both the investigating agencies as also the media organizations. This is in public interest. But action and investigation in a few banks and in few cases and neglecting or sidetracking other similar cases and the concerned banks violates the basic principle of equity.
If both the government and large number of banks, consumers and investors want to keep the banking system clean for avoidance of frauds and scams, the cleanliness drive should encompass all public and private sector banks. While speaking before the Public Accounts Committee (PAC) of Parliament, the Reserve Bank of India (RBI) Governor has said that the RBI lacks the autonomy to control banks. But this is only the half-truth.
Because, RBI has used its autonomy in introducing two concepts of ‘project finance’ and ‘ consortium of finance’, which are favourably used to allot crores of rupees to big corporate giants. One of which is Vijay Mallay. The State Bank of India (SBI), which is enjoying the status of a government bank, had taken the lead to persuade other 17 banks to come forward to finance Mallya on the concept of ‘project fiancee’ and the ‘consortium’. SBI move, in early 2010s, was based on Mallya’s proposal for loan amount for future prospects of Kingfisher Airlines. However, his projection later proved to be more virtual than real.
When the Mallya phenomenon came to light, in a TV discussion, the banking union leader Vishwas Utagi made a statement that Mallya is not the one but there are 7,000 Mallyas. Later, when asked, Utagi confirmed his statement and said that the way big giants are financed with favor is disclosed by the Union with names of the willful defaulters. But no action is taken and only Mallya is open in the limelight.
While Chanda Kochhar of the ICICI Bank is now being focused, and the chief of the Bank of Maharashtra, with other officials, are arrested on charge of favouring the Pune-based DSK group, what about other similar cases as also the much-discussed the Mallya case? How loans of crores of rupees were sanctioned by so many banks, what were the security and who were the guarantors and why the action was not taken within one year after the loan was in the NPA are the questions not being raised so far?
If so much light is on the Mallya case, why the way his huge loan was sanctioned and what irregularities were condoned, and whether there was any collusion by the concerned bank officials (as is alleged in the BoM and DSK case), is not so far investigated?
This is a vital question, which needs clarification. And if there are more cases of the type and are already disclosed by the Union what action of investigation is being taken in those other similar cases is also important. This is more so because most of the defaults of big willful defaulters are relating to big amounts sanctioned under the strategic devices of ‘project finance’ and ‘consortium of finance’. (It should be noted in this context that loans were given by banks on only the allotment order in 2-G spectrum cases as reported in the media!)
This device is not used in any case of an educated unemployed with his ‘project’ of self-employment enterprise or any small-scale entrepreneurs who are safely denied loan on one pretext or the other despite their viable projects. Misuse of loans for spending on individual needs of garments and footwear is also a very minor objection in view of huge donations or birthday gifts to wives with costly cars and planes and high amounts spent in marriages and even honeymoons and bills are paid by company accountants. This is a known ‘modes operandi’ which is not so far objected either by bankers or IT sleuths or Enforcement Directorate.
Now that the DSK case is being accused of these flaws let all similar cases of use and misuse of company funds for private consumption should be duly investigated. It is obviously in both the public interest and also in the interest of legal necessity to follow the principle of equity that all such cases in all banks need investigation and necessary action.
*Senior journalist and columnist