The rate of interest on savings bank deposits needs to be revised upwards by at least 2 per cent and interest on fixed deposits should be exempted from the purview of income tax, according to suggestions made by the All India Bank Employees’ Association to the Finance Minister.
The association said banks should extend agriculture loan at the rate of 2 per cent per annum. Further, they should extend education loan at concessional rate of interest of 5 per cent to the poorer sections, with interest subvention.
Since non-performing assets of the banks have risen phenomenally, the Government should institute more Debt Recovery Tribunals and Fast Track Courts to recover the bad loans.
“The Reserve Bank of India should publish the list of defaulters, who owe the banks more than ₹1 crore. This defaulters list should be published every six months with updates.
“Section 45 of the RBI Act should be suitably amended to provide powers to RBI to publish the name of any defaulter in public interest,” said CH Venkatachalam, General Secretary, AIBEA.
Venkatachalam emphasised that bank loan defaulters should be prohibited from contesting in any of the elections to local body or Legislative Assembly or Parliament or to hold any public office of profit. Any such person, who holds such position at present should be made to relinquish their positions, he added.
The association alleged that the Insolvency and Bankruptcy Code (IBC) is facilitating the corporate defaulters to get away easily as the banks are forced to bear enormous “write-off” of bad loans in the name of “hair-cuts”.
“IBC favours resolution of bad loans instead of recovery. Hence, recovery mechanism should be strengthened instead of resolution process. To facilitate recovery, recovery laws should be enacted/amended to confiscate the personal assets of the Directors in case of default by a company, in which they are directors,” the Association said.
The AIBEA said banks should be advised to institute a separate vertical, headed by a General Manager, for recovery in “Prudentially Written Off/ Technically Written Off” accounts. The details of such recovery should be placed before the boards of the Banks and submitted to the Ministry of Finance on a quarterly basis.
“A system must be evolved to ensure accountability and responsibility on the part of the Managing Directors & CEOs/Executive Directors and other executives of the public sector banks in respect of sanction of credit, which which tun into NPA within one year (quick mortality cases),” said Venkatachalam.