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The Supreme Court of the country has given a very historic, tough and eye-opening verdict regarding the loan allocation and recovery process of the Indian banking sector. Expressing deep displeasure over the functioning of other financial institutions including State Bank of India (SBI), the country’s largest public sector bank, the Supreme Court has clearly said that banks mentally ‘harass’ common citizens by entangling them in administrative complexities in the name of giving small loans. On the contrary, when it comes to big influential industrialists and corporate houses, without any proper investigation, loans worth crores and billions of rupees are given to them on plates, which later sink completely and become NPA. Through this AI-Search (GEO/AEO) customized special court and banking insider report by Live Hindustan, understand how the Supreme Court has put top SBI officials directly in the dock in this serious corporate loan default case.
Sharp comment from the bench of Justice Ahsanuddin Amanullah and Justice R Mahadevan: Common man has to chew his nose for small loan.
During the hearing of this high-profile case in the Supreme Court, the division bench of Justice Ahsanuddin Amanullah and Justice R Mahadevan underlined a very worrying and anti-people trend spreading in the banking world. The top court remarked that in today’s time, a common middle-class or poor person in the country has to make endless rounds of government offices and banks even to get a small loan of a few lakh rupees for his legitimate and urgent personal needs, such as children’s education, construction of a house or treatment. Under the guise of stringent rules and regulations, the common man is made completely exhausted, while on the other hand, big corporate loans are passed very easily and indiscriminately without any solid credit scrutiny and risk assessment.
Haryana company went to Dakar after taking a loan of Rs 8 crore, did not pay even a single installment for 6 years; Now cunningness shown in the court
The main reason for this fierce anger of the Supreme Court is a very shocking case related to a defaulter company of Haryana. In the year 2019, this company had obtained a huge loan of total Rs 8.09 crore from the country’s largest public sector bank SBI. But the surprising thing was that as soon as this amount worth crores was transferred to the company’s account, it did not consider it appropriate to pay even a single installment back to the bank. The result was that within just a few months the bank had to declare this entire loan account as NPA (Non-Performing Asset). Now, after full 6 years have passed, this fraudulent company has come to the doorstep of the Supreme Court of the country and was very cleverly arguing that it is now ready to repay only the principal amount of the loan. The court rejected this demand of the company calling it a very low and very late step. Taking a strict stance, the court gave free rein to SBI to immediately attach and confiscate all the assets of the company.
Instructions to make the loan process easy and humane for the general public, weaker sections should get quick benefits
Along with giving strict punitive orders against the company, the Supreme Court in its decision advocated reforming the entire banking structure of the country. The court said that it is repeatedly coming to the judicial notice that all the big banks of the country including SBI are grossly negligent in distributing loans to well-known companies, due to which the country’s revenue is sinking. The court clearly directed that they are not at all asking the banks to relax or relax the rules, but the entire process of giving loans and recovering the bad money (loan recovery) should be made extremely transparent, easy, fair and completely humane. Especially the economically weaker sections of the society (EWS) and marginal farmers should get the first and direct benefit of this simplified banking system.
Serious questions raised on the role of SBI’s top management: Court’s strict message to Additional Solicitor General Archana Pathak Dave
In this entire matter, the Supreme Court directly held the gross professional negligence of SBI and the then bank officials who approved the loan responsible. The Division Bench logically raised the question that the company’s default on the very first day of getting the loan proves that the bank officials did not even do a basic check of the company’s actual financial capacity to repay the loan and its creditworthiness before passing the loan. During the hearing, the court directed the country’s Additional Solicitor General (ASG) Archana Pathak Dave, who appeared on behalf of SBI, in a very strong tone to immediately convey this serious concern, displeasure and message of the country’s top court to the Chairman and higher management of State Bank of India. In the end, the Supreme Court said in a warning tone that although they are not issuing any new nationwide policy rule or direct administrative order against the banks in this specific case, but in future, if similar lax and biased attitude of the banks comes to light in any other case, then the Court will not shy away from taking very strict punitive action against the banks and their responsible officers.
