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Draft bill to check inter-state chit fund frauds soon: Jaitley

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New Delhi, Aug 3, 2017: The government has prepared a draft law to check frauds by chit fund companies which operate in more states than one, Finance Minister Arun Jaitley said in the Lok Sabha on Thursday. He also declared that criminal and recovery proceedings will be started against defaulters of bank loans who divert money.

“We are bringing out a draft central law for chit fund companies that operate in more than one state, which will be placed in the house for discussion,” Jaitley said, adding that individual state governments had their own laws to deal with such companies operating within the state.

Replying to the debate on the Banking Regulation (Amendment) Bill, 2017, the Minister said that pension schemes for senior citizens run by the Life Insurance Corporation (LIC) that provide 8 per cent interest will dissuade people from putting their savings in chit funds.

Jaitley’s disclosure on the move to check chit funds comes against the backdrop of several chit fund companies duping people of thousands of crores of rupees in several states.

The Minister referred to states like West Bengal, Odisha and Punjab in the context of states having powers to regulate chit funds on their own.

Earlier, members including Pappu Yadav of the RJD demanded strict measures to check the activities of chit funds.

After the Minister’s reply, the house passed the Banking Regulation (Amendment) Bill, 2017, after rejecting a statutory resolution disapproving the Ordinance moved by a Congress member.

Under the bill, the central government may authorise the Reserve Bank of India to issue directions to any banking company to initiate insolvency in respect of a default under the provision of the Insolvency and Bankruptcy Code.

It also has provisions empowering the Reserve Bank of India to issue directions to banks for resolution of stressed assets.

“Many NPA cases could be fraud, as money taken was diverted. These are not routine NPAs. Criminal proceedings will be carried out and bank will start recovery procedure for such accounts,” Jaitley said.

Speaking about the bill, Jaitley said that a company defaulting on loans cannot claim the right of equality in treatment as regards repaying the loans. He said defaulting companies cannot ask why it was being targeted when some other defaulters were being let free.

“No, that cannot be an argument. The system has the capacity to take only a certain number of cases. I’m sure they will take up more case,” he said, referring to the 12 non-performing assets (NPAs) that have been identified for action by the National Company Law Tribunal (NCLT).

The Minister said that the loans, which have turned NPAs, were probably given at a time when the economy was in a “boom” period and they seemed good investment proposals.

“Nobody anticipated global crisis at that time… in last 3-4 years, prices of commodities collapsed. We’re now trying find a solution for this difficult situation,” he said.

“Our laws are obsolete and impeding the recovery process… therefore this mechanism was set up. It will select defaulter, direct banks to move expeditiously against the defaulter. NCLT will dispose of the case within 180 days. This process will recover the public money, so no one should have objection,” he added.

Tracing the background of the NPAs problem of public sector banks (PSBs), Jaitley said that while private sector concentrates on retail lending for car and home loans, PSBs have been much ahead in industry and infrastructure lending for the overall growth of the economy and contribute to spending on social programmes.

The Minister also noted the multiple options available for resolution of stressed assets.

He said the options that the banks could offer the borrower were to exit from the business, bring in a partner for a joint venture, go for resolution through the asset reconstruction companies (ARC) or themselves take a haircut on the loan amount.

“At the end of the day, we need to change. They are national assets and we need to save the companies, have companies which are able to pay the banks,” Jaitley said.

Referring to NPAs which amounted to more than 13 per cent of advances in 2001, the figure came down to less than 3 per cent in 2007-08, Jaitley said.

The sectors most responsible for the accumulated NPAs are steel, power, textiles and infrastructure, he added.

While the debt recovery tribunals (DRTs) set up in the 1990s that liberalised the system, Jaitley said, there were still problems where honest bankers had to decide on loans. They had to operate in the context of the Prevention of Corruption Act (PCA), in which an honest decision can go bad and they had to face the legal consequences.

“Some of our laws are obsolete… For instance, Section 13 of the PCA was drafted in 1988 prior to the liberalisation era to deal essentially with corruption. It can also be extended to decisions honestly taken but may look erroneous from another point of view.”

“Now, we have a complete situation. The consortium of banks or individual bankers when they take decisions… so an oversight committee has been established which will overlook the settlements made and advise them on reasonable settlement,” he said.

The Finance Minister said that a stalemate had developed over the whole NPAs, or bad loans, situation.

“These NPAs are continuing for last 5-7 years, a stalemate situation had been reached. This process had to be broken.”

 

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J&K should become bridge of friendship between India, Pakistan: CM

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Jammu Kashmir CM, Mehbooba Mufti (Photo-ANI)

Srinagar, Jan 21: Jammu and Kashmir Chief Minister Mehbooba Mufti on Sunday said her state should become a bridge of friendship and not a battlefield between India and Pakistan and appealed to the leadership of the two countries to do so.

At present, the Line of Control and International Border in Jammu and Kashmir have been witnessing a bloodbath, she said in her speech to police recruits at the passing out parade at the Sheeri Police Training School in Baramulla district.

“As the country moves on the path of development, the opposite is happening in our state,” she rued.

The Chief Minister lauded the police for bravely facing the toughest of professional challenges while making the ultimate sacrifice for the country.

“Handling law and order, you have to face your own brothers to restore peace and at the same time act with patience and restraint,” she told the policemen.

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Rajasthan govt asks Karni Sena to jointly move Supreme Court

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Padmavati Padmavat

Jaipur, Jan 21: The Rajasthan government on Sunday said it has invited the Rajput Karni Sena and Rajput associations to be a party in its review petition in the Supreme Court against its order allowing the release of film “Padmaavat”.

Home Minister Gulab Chand Kataria told news agency IANS, that the invitation was given to “strengthen the case” against the Hindi movie which critics say distorts Rajput history.

Lokendra Singh Kalvi, the founder of Rajput Karni Sena, told IANS that he was excited over the new development.

He quoted Kataria as saying that “we should all cooperate with each other in court to strengthen our case”. But the protests against the movie will continue, Kalvi said.

Continuing its protest against the screening of controversial film Padmaavat, Shri Rajput Rashtriya Karni Sena had threatened that it will not allow Central Board of Film Certification (CBFC) chief Prasoon Joshi to participate in 2018 edition of Jaipur Literature Festival. Registering its disagreement with Joshi, Rashtriya Karni Sena chief Sukhdev Singh Gogamedi on Friday threatened to disrupt session at JLF if Prasoon Joshi attends.

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President approves disqualification of 20 AAP MLAs, AAP to approach High Court

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Arvind Kejriwal
Arvind Kejriwal (Chief Minister Of Delhi) (File Photo)

New Delhi, Jan 21: President Ram Nath Kovind has approved the disqualification of 20 Aam Aadmi Party (AAP) MLAs in Delhi on charges of holding Office of Profit, an official spokesman said on Sunday.

Meanwhile, on President’s approval Delhi Minister Gopal Rai, said, “We had hoped to go to the President asking him to give us a chance to present ourselves. Now we received this news. AAP will knock the doors of HC and even SC if the need be .”

Congress after President’s assent to disqualify 20 AAP MLAs said: “AAP has been helped by BJP & EC by delaying the decision for over 3 weeks.” Delhi Congress President Ajay said, If decision would have come before 22nd Dec, these 20 MLAs would’ve been disqualified & couldn’t have voted for RS elections.”

BJP MP from Delhi Meenakshi Lekhi commenting on the issue said, “The fact that their RS nomination happened means EC was working at its own pace & there was no pressure that Arvind Kejriwal seems to have alleged.These are constitutional bodies whose mandate is to obey the law.”

However, one of the 20 AAP MLAs disqualified over accusations of Office of Profit, Alka Lamba told ANI that this is very unfortunate that the President took the decision in such haste, without giving us chance to speak. “It’s an act of Centre using constitutional institutions. We’ve trust on judiciary. Doors of HC & SC is open for us,” she added.

Election Commission on 19th January sent its recommendation to the President for his assent to disqualify 20 Aam Aadmi party MLAs for holding ‘office of profit’. According to news agency ANI, the Election Commission said,” Recommendation on AAP MLAs is sub judice, will not comment on what recommendation has been given to the President.”

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