NEW DELHI: The Congress on Wednesday opposed a clean chit to all wilful defaulters and who ran way with public money, opposing the Reserve Bank’s circular on June 8 to allow them fresh loans after 12 months of “cooling period.”
Noting how Prime Minister Modi has always changed rules to help his friends in a few large business groups like Adanis, Congress general secretary and chief spokesman Jairam Ramesh said the All India Bank Officers’ Confederation and the All India Bank Employees Association, that represent 6 lakh bank employees, have both opposed this policy.
He said the RBI knows well the dangers of its move. “Two years ago, it had clearly stated that wilful defaulters would not be allowed to access capital markets or take fresh loans. As recently as 29 May 2023, the RBI governor warned about the many ways in which defaulters and fraudsters conceal the true status of distressed loans. Will the RBI clarify if the Modi government has pressurised it to take this U-turn?
Jairam said the Indians have paid a high price for fraud and wilful defaults. Banks wrote off loans worth ₹10 lakh crore between 2017-18 and 2021-22. The recovery rate for these loans is an abysmal 13%, which means that only ₹1 is being recovered out of every ₹8 written off. The top 50 wilful defaulters, a list headed by PM Modi’s friend Mehul Choksi, owe a substantial ₹92,570 crore (as on 31 March 2022). Banking frauds have risen 17-fold under the Modi government, from
₹34,993 crore in 2005-14 to ₹5.89 lakh crore in 2015-23.
In contrast, he said the honest borrowers – farmers, small and medium enterprises, and middle-class salaried workers
– are groaning under relentless EMIs. They are never given a chance to renegotiate their loans. Yet the Modi government has now provided fraudsters and wilful defaulters such as Nirav Modi, Mehul Choksi and Vijay Mallya a path to rehabilitation. While wealthy financiers of the BJP are given every undeserved convenience, honest Indians struggle to pay their loans. This reveals the true nature of this suit-boot-loot-jhoot sarkar, he said.
In a statement, Jairam Ramesh made three demands on behalf of the Congress:
— RBI must immediately repeal its instructions and prevent banks from settling with wilful defaulters and fraudsters.
— RBI must clarify why it thought these instructions were necessary at this time despite its repeated warnings.
— RBI must reveal if there was any pressure from the Modi government to issue these instructions.
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