ASSOCHAM cautioned against allowing the alleged fraud in the Punjab National Bank (PNB) to halt the entire system of corporate lending as demoralisation would set in among the top functionaries and employees of the state-owned banks, something the country can ill-afford at a time when the credit growth was about to recover and economy was set to grow at a higher pace.
“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. 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,” ASSOCHAM Secretary General, D.S. Rawat said.
ASSOCHAM noted that there are disturbing reports about banks clamping down certain impractical rules and procedures for trade finance, affecting both importers and exporters. “The 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.”
The January export data shows a deceleration in growth even when the global economy is on the uptick. The prick up in the domestic economy would require higher imports. Thus, both imports and exports are key to our economy and we have come a long way in scaling up the inter-face between the government agencies and the trade over the years. It is time to correct the systems which had allowed the misuse and move on with the task of achieving higher economic growth. “How else we encourage investment and jobs if we do not infuse confidence and trust in our financial system.”
The ASSOCHAM urged the Finance Ministry (FinMin) and the Reserve Bank of India (RBI) to send strong messages across different stakeholders about the robustness of the Indian financial sector, giving, though a tough warning against offenders.
“By all means, punish the offenders at a fast speed and set examples; but the business should not be allowed to halt. There is a need for vigilance among all the lenders, even in the private sector. After all, in an ever-connected world there are several common technology pathways, which can be subverted. It is about time to restore confidence and move on.”