Punish bankers who caused loss

I think the failure of big financial institutes like Citi Group, Lehman Brothers, GE Money etc. as also auto giants General Motors should open the eyes of the government all over the world, particularly India.

They should discover the real reason for such failure of such big giants. No doubt the government needs to give bailout package for such flops to avoid further turmoil in the economy and to stop aggravation in pain caused as a repercussion to poor. But at the same time government needs to understand who are those criminal ( for whom government is providing bail)whose faulty action caused huge losses to not only to their own financial institutes but damaged all other sectors and which has pushed the world in the domain of recession. Such criminals must be punished to avoid recurrence of such global crisis in future.

I thing Indian government has also to understand that wrongful lending by banks under pressure of Finance Minister and their inability to recover the money from defaulters due to ineffective police and judicial system are the root cause of crisis of liquidity in the banking system. Concealment of bad assets cannot be continued for long period.

It is also true that withdrawal of FII fund from banking has added fuel to fire. But extra liquidity provided by FM has at least compensated the system FII withdrawal adequately. Banks and government of India may try to hide their past mistakes in framing policies and their in their execution in the name of global crisis.

Therefore need of the hour is to avoid over lending without apply prudent norms of lending and to ensure recovery of each single pie of bad loan from willful defaulters , either by hook or crook to establish a culture of repayment and in any case government must avoid the culture of write off or compromise with willful defaulters .

If for social welfare, or government want to help farmers and other downtrodden , they may extend such help and charity through their own machinery keeping banks away from such charities so that bank’s culture of lending and repayment remains intact.

Danendra Jain
26th November 2008