The arrests by the Central Bureau of Investigation of former IDBI officials are worth noting .The agency is investigating these officials, who had been at the helm of the public sector bank’s affairs eight years ago, on charges of facilitating a Rs. 900-crore loan to the now-defunct Kingfisher Airlines without due diligence.
Status of Mr. Mallya
Mr. Mallya owes banks close to Rs. 9,000 crore and has been in exile in the U.K. for nearly a year, even as his lenders have scrambled to recover their dues.
Amidst the rising pile of non-performing assets in government-owned banks, wilful defaulters were said to be responsible for around Rs. 77,000 crore of bad debts, but the Kingfisher baron has emerged as the poster boy of the problem.
Breaking the banker-borrower nexus is just as critical for safeguarding public money as is acting against corrupt administrators, but a timely and transparent system is needed to ensure that bankers don’t turn wary of extending credit at the slightest hint of risk.
Prime Minister Narendra Modi had, early in his term, urged officers to take bold decisions without fear of retribution and promised to stand by them for decisions taken in good earnest. That promise requires:
1. Some necessary amendments to the Prevention of Corruption Act, particularly the much-too-broad and subjective Section 13(1)(d) that has resulted in many an honest officer being charge sheeted for the corruption of others.
2. If there is malfeasance involved in the IDBI loan, action must be swift and exemplary — but to ensure circulation of credit, systems must also be put in place to reassure bankers against random witch-hunts.