Thursday, Jul 18, 2002
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By Our Special Correspondent
Releasing a list of 1,593 defaulters, who owed Rs 1 crore and above to banks and financial institutions based on figures compiled and published by the Reserve Bank, at a press conference here today, N. Sampath, president, TNBEF; and C.H. Venkatachalam, general secretary, AIBEA, said bank employees would launch a public campaign, starting with a human chain in the city on July 19, to exert pressure on the Union Government to give up its plan for privatisation of public sector banks and setting up asset reconstruction companies (ARCs) to take over bad debts of banks at a discount.
Alleging that a substantial portion of overdues to banks was ``wilful default'' where the borrowers, mostly from the manufacturing sector, had siphoned off funds or otherwise had substantial assets, Mr Sampath said the ARCs would enable the same defaulters to buy the securitised bad debts at a discount and thus get rewarded for their malfeasance.
``Even though the capital will be subscribed to by the public sector, the ARC will be in the private sector and outside the ambit of the Chief Vigilance Commissioner and the Central Bureau of Investigation'', he said.
The bank union leaders demanded that criminal action be taken against wilful defaulters, and not action by way of mere civil suits. He cited figures to show that the Debt Recovery Tribunals (DRTs) had failed to deal with mounting wilful default.
Welcoming the ``improved definition'' of wilful default notified by the RBI recently, Mr Venkatachalam conceded, in reply to a question, that at least a portion of defaults was due to weakening of the indigenous industry sector and the national economy as a result of economic reforms and globalisation and to that extent might not qualify to be described as wilful. He agreed that some public sector undertakings too had defaulted or State government guarantees provided to them could not be honoured.
The bank employees' demands included an increase in the interest rate on small savings and deposits and withdrawal of the permission for foreign direct investment (FDI) in banks up to 49 per cent of the equity capital. The AIBEA, in association with other unions in the banking and financial sector, would in the next few months launch a nationwide campaign, including collection of three million signatures in Tamil Nadu (and three crore signatures all over India). It would culminate in a march to Parliament on November 27, Mr Venkatachalam said.
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