No witch-hunt of bankers, please–Economic Times–22.06.2018

If you are a self-proclaimed gangster running operations in Maximum City from a safe haven abroad, you will be the anti-hero of faux film noire. If you are a hardworking banker, you are likely to go to jail. Many companies have defaulted on loan repayment, some large borrowers have brazenly fled the land and the government desperately needs to wipe runny egg off its face and demonstrate to an increasingly cynical public that it is cracking down on corporate skulduggery that endangers depositors’, read voters’, money. Tough luck for the banker. Tough luck, also, for the economy. Serial arrests of bankers for alleged corruption kills, not improves, business.

The arrest of the Bank of Maharashtra (BoM) brass for alleged cheating is the latest instance of the government clanging the stable shut after the horse has bolted, creating collateral damage in the form of the family dog trapped inside. The Economic Offences Wing (EOW) of the Pune police has a case against a city developer, who took money from 33,000 investors and fixed deposit holders.

BoM lent it some.`940 crore, which the EOW holds to be fraudulent, never mind that the loan was sanctioned by the normal credit appraisal and approval process, that the loan is fully secured and recovery procedures are underway under the relevant laws. Indeed, if there has been corruption, the government has the duty to make it clear that crime does not pay. But it would be criminal if the crackdown on bankers is meant to score a political point, leaving it to the flaccid justice system to eventually let off arrested bankers sagging under tattered reputations.

After years of subpar performance, the economy shows signs of vigour. For it to gain strength and flourish, bank lending must flow. A perception that any loan granted today could turn into shackles tomorrow would prevent bankers from lending. A clear political message must go down that no banker or businessman should be arrested without rigorous proof of wrongdoing. Grabbing hold of just any bird will not convince people it is worth the couple that have fled to the bush.

This piece appeared as an editorial opinion in the print edition of The Economic Times.
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via No witch-hunt of bankers, please

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