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MUMBAI: Interim finance minister Piyush Goyal Tuesday warned banks that if they did not follow the due process and go against prudential lending norms, the problem of bad loans count will mount in the country where public opinion is getting shriller against financial profligacy.
Speaking at the State Bank of India conclave in downtown Mumbai, Goyal said that if there has been any wrongdoing in the loan process, there has to be culpability.
These comments come at a time when several bank CEOs have come under the scanner of investigative agencies and law enforcement after some loan accounts turned sour.
Bankers were seemingly held accountable for taking bonafide decisions, something that is bothering the current banking leadership that may face questions in the future if some of the moves they now took were to turn commercial failures.
Bankers were disappointed that R Marathe, CEO of Bank of Maharashtra, was recently arrested by the state police after the borrower failed to repay deposits to deposit holders on the ground that there were irregularities in lending.
Piyush Goyal said: “If there are one or two aberrations, it is very unfortunate.
But it will get sorted out through the legal process.
We have a very robust judiciary.”
Even Arun Jaitley condemned the state government’s move to act against the bank CEO without the consent of the Centre, while Rajnish Kumar, chairman of State Bank of India, said that the probe agency has acted beyond its reach.
Goyal said that genuine business failures have to be addressed through resolution and that everything cannot be sent for liquidation as it cannot be the panacea for all ills.
“We support good borrowers and ensure that flow of credit is not impacted,” he said.
There will be business failures but there have also been situations where loans have been diverted.
“We found large amounts stressed assets where problems were not recognised and only postponed,” he added.
Goyal said the government will meet the fiscal deficit target this year and will win the people’s mandate to run the country for the next five years.
