PNB fraud should not halt corporate lending: Assocham

NEW DELHI: The alleged Rs 11,300 crore fraud on state-run Punjab National Bank (PNB) committed by means of accused diamantaire Nirav Modi must no longer halt all of the gadget of corporate lending as demoralisation would set in amongst public sector financial institution (PSB) employees, trade body Assocham stated on Sunday.
The country can "ill-afford" such fraud triggered credit slowdown at a time when credit expansion is appearing indicators of restoration and the financial system set to develop at a higher tempo, the Associated Chambers of Commerce and Industry of India (Assocham) stated in a unlock right here.

Noting the aggravating stories about banks clamping down sure impractical laws and procedures for industry finance, affecting each importers and exporters within the wake of the PNB rip-off, Assocham stated the letters of credit (LOC) or letters of endeavor (LOU) allegedly misused by means of the diamond traders are professional instruments in world industry.

"While we may seek long-term solutions like privatisation of the banks, the need of this hour is to rally around honest bank officers and the honest business entities which have built trust on each other," Assocham Secretary General D.S. Rawat stated in a commentary.

"Let one or a few black sheep not derail our financial system, which is resilient enough to withstand this kind of shocks, though ideally such jolts are better avoided and averted through systemic reforms," he added.

According to Assocham, "letters of credit or letters of undertaking are an internationally accepted system of global trade."

"While we need to ensure safe and sound functioning of the system and not allow loopholes like those in the PNB system of money or guarantee transfer, let banks not over-react and hit the trade and industry."

Noting that Indian exports in January confirmed a deceleration in expansion "even when the global economy is on the uptick", Assocham stated: "The pick up in the domestic economy would require higher imports. Thus, both imports and exports are key to our economy."

"How else we encourage funding and jobs if we do not infuse confidence and consider in our monetary gadget.

"By all method, punish the offenders at a quick velocity and set examples; however the business must no longer be allowed to halt. There is a necessity for vigilance amongst all the lenders, even within the private sector," the commentary added.

Meanwhile Finance Minister Arun Jaitley has criticised regulators, in addition to financial institution managements and auditors, for his or her failure to hit upon financial institution frauds pronouncing "politicians are accountable however regulators are not".

"We must always understand that regulators have a vital function. They in the end make a decision the foundations of the game and they have to have a third eye saved forever open and became against the sphere. But unfortunately, within the Indian gadget, we politicians are accountable, the regulators are not," Jaitley stated.
PNB fraud should not halt corporate lending: Assocham PNB fraud should not halt corporate lending: Assocham Reviewed by kailash soni on February 25, 2018 Rating: 5
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