Bank union threatens to expose defaulting companies

Bank union threatens to expose defaulting companies
ENS ECONOMIC BUREAU

NEW DELHI, DEC 18: While few can have any sympathy for the banks which continue to erode their net worth, and which CII recommended be closed down, the chamber may have bitten off a lot more than it can chew. Today, Ficci said that closing down Uco Bank, Indian Bank and United Bank of India could trigger off an erosion of confidence.

Worse for CII, the bank employees' union, the AIBEA, in a signed statement issued in the Capital, said if the CII did not withdraw its recommendations to close down three banks within a week, the association would disclose the names of the corporate defaulters, who owe over Rs 50,000 crore to the nationalised banks, defying the Reserve Bank of India (RBI) guidelines on secrecy.

The statement alleged that these industrialists who were taking cover under the secrecy clause in the banking industry and thriving by hoodwinking the banks, had prescribed closure of these banks. If the recommendations were accepted, they would not have to repay the huge loan amounts to these banks,it added.

According to AIBEA, their increasing political clout with the Government after the liberalisation had given them licence to play around with the banking industry and economy.

The statement pointed out that two of its task force members Rahul Bajaj and Bharat Ram together owe the banks a sum of Rs 1,000 crore. Instead of repaying the loans which has contributed to the mounting non-performing assets, "this motley group of industrialists have recommended closure of the weak banks".

It was pointed out that on the first place these members had no moral right to be in the CII task force. Secondly, instead of recommending for closure of the weak banks, they should have suggested how to recover the money from the corporate defaulters.

The statement further added that a similar situation in neighbouring Pakistan was firmly dealt with by the military rule and industrialists were threatened with criminal proceedings if they did not repay the loans to the banks.

The Uco Bank, in an official reactionto the CII Task Force Report, said: "CII and Task Force has no moral grounds to condemn banks, as they represent industries which are responsible for large part of NPAs and consequent problems of banks."

The Uco Bank also tried to clarify that, "the Task Force was not appointed by either the Union Government or Reserve Bank and it has no official existence." According to the bank, "the problem identification in the report is erroneous and the solution suggested ill-conceived."

The Uco Bank, on the other hand, pleaded for removal of procedural and legislative bottlenecks that have come in way of banks expeditiously enforcing their claims on borrowers.