Friday, 20 July, 2018

Industry needs to get in habit of doing ethical business: Jaitley

Don't let PNB fraud halt business lending ASSOCHAM to Arun Jaitley ASSOCHAM Secretary General D S Rawat also urged the Finance Ministry to take strong actions against the offenders. Image source PTI
Nellie Chapman | 25 February, 2018, 08:33

Terming bank frauds as scars on the Indian economy, Finance Minister Arun Jaitley on Saturday said the business community must move towards the "habit of doing ethical business", and warned that consequences of not following ethical practices will be a "commercial and civil death as far as their business are concerned".

"The old concept that the money that has been borrowed may or may not be returned has to end now".

Highlighting the presence of shell companies in the economy, Jaitley said the creating of such companies and round tripping money has gone on for decades, adding that new regulations need to be implemented for stringent check on business practices.

The finance minister said the government may tighten the laws to deal with people who run out of the country after defrauding banks.

Without naming either the alleged kingpin of the fraud, billionaire jeweller Nirav Modi, or PNB, he said it is "worrisome" that not a single red flag was raised when the fraud was perpetuated.

Regulators should have a "third eye" open to detect and check such frauds.

"At least if elections are held every five years, India will see comfortable governance and policy formulation besides lesser expenditure", he said.

"This involves a large political consensus. It's a very challenging decision", he said.

Nirav Modi, whose diamond creations have draped Hollywood stars such as Kate Winslet and Dakota Johnson, his uncle Mehul Choksi and firms linked to them are alleged to have acquired fraudulent letters of undertaking (LoUs) from one PNB branch in Mumbai between 2011 and 2017 to obtain loans from Indian banks overseas for which they were ineligible.

Among the industrialists who supported bank privatisation is Adi Godrej of Godrej Group, who said the move would be good for the country as there are "less or no" frauds at private banks.

Industry bodies Ficci and Assocham have raised voices for privatisation of state-owned lenders in a phased manner. "The Indian businesses have to realise it has to be in the habit of doing ethical business which I think needs to be introduced".