In the aftermath of unearthing of the PNB scam, I wrote an article in my blog titled - "The PNB fiasco and the credibility of the bankers". This is still available in the blog which is dated 9th February 2018.
After reading this article, one of the top executives of our Bank at Corporate center what's apped me a short story which went something like this. It may not be the exact verbatim but the message is not lost.
Quote : A Buffalo was found running helter skelter and in great consternation. It was accosted by another Buffalo. The second Buffalo asked the first as to why it is running. The first replied, the government has ordered the arrest of all the cows and therefore I am running away. But you are not the cow. True, said the first one, but if I am arrested it takes 20 years to prove that I am not a cow. On hearing this the second Buffalo also ran away along with the first one.
Unquote : I didn't understand why he send this story nor did I appreciate the import of the message inherent in the story at that point of time. When the backdrop of the recent amendment to anti corruption law was discussed, I could appreciate and relate the morale of the story. It was argued that the indiscriminate arrest of the bankers by the investigative agencies whenever a loan turned bad has a debilitating effect on the ability of the banker to take a commercial decision to lend. This fear psychosis among the bankers has slowed down the credit off take and has an adverse effect on the growth of the economy. The IBA too had expressed its concern and in fact had taken up the matter with the government. The credit for amending the law should go to the finance minister Arun Jaitely without whose initiative, the amendment would not have seen the light of the day. He being the lawyer cum finance minister could understand the need for an amendment to the act and also succeeded in getting the amendment passed in parliament. The amendment to the law now requires permission from the appropriate higher authority to arrest an officer / banker. To that extent a safeguard clause has been inserted into the law. Whether this alone will suffice to allay the fears of the lenders has to be seen with the passage of time.
Now that, the concern of the bankers and IBA has been addressed by the government, it is expected that lending business will kickstart. The amendment to the anti corruption law may not be the panacea for the poor credit off take. The problem requires a holistic treatment of the other enabling stimulators like quick disposal of cases before NCLT and NACLT etc.
