Reform banking sector

Two big banking scams have surfaced in the last one month. Punjab National Bank (PNB) has been hit hard by Rs 11, 397 crore scam. Designer jeweller Nirav Modi and his uncle Mehul Choski’s Gitanjali group together swindled Rs 11, 397 crore from Punjab National Bank using fraudulent method. They fled country just prior to unearthing of the scam. Some of the PNB bank’s employees at a Mumbai branch allegedly issued letters of undertakings, or LoUs, to Modi’s companies, which enabled them to raise money from international branches of other Indian banks in the form of buyer’s credit.
Even as nation were struggling to come to term with PNB scam, news of another bank scam to the tune of 3,700 crore rupees hit the country. Rotomac group owner Vikram Kothari allegedly defaulted loan of around 3,700 crore rupees towards a consortium of seven nationalized banks. Both the case is currently being investigated by the CBI. The rich businessmen are continuing to bleed nationalized banks by taking huge loans and not repaying them. So far government has miserably failed to recover money from these affluent defaulters. First it was Kingfisher promoter Vijay Mallya who defaulted massive amount of loan money and fled the country. Even he slipped out of country just few days before the authorities were about to initiate action against him. Nirav Modi also left country in similar circumstances. It seems in both the cases they were tipped off. There is an urgent need to reform the banking sector. The growing accumulation of non-performing asset poses grave threat to the banking sector. The government of India will have to take urgent remedial measures to save the banking sector.