One notices a malicious tendency in some unprincipled and dishonest people to exploit and misuse relief measures of the government, particularly during times of crisis. We have seen how food grains meant for the poor have been misappropriated for profiteering. How, allegedly, PPE masks procured by the government failed to meet the required medical standards. And now we have the unscrupulous businessmen scampering for loans, taking advantage of a government policy.
The government as part of its incentive package to the businesses and industrial sector during these hard times, had announced the stay of all interest on loans between April 1 and May 31. This is in addition to the decision of the government not to declare any borrower a defaulter for being unable to pay back the loan, till June 1. But as soon as this was announced, there was a glut of applications for loans, which is in stark contrast to the situation in the previous month when all kinds of investments by the business sector were put on hold in the face of the present economic fallout and of a very uncertain future. And interestingly, many of those seeking loans are previous defaulters.
We believe that such a timely measure is meant to help those industries and businesses that have been thrust in very dire straits during the pandemic. And that includes the banking sector too, who are struggling with the downtrend in borrowing in recent times. Therefore, banks must exercise strict scrutiny to ensure that those who are habitual defaulters and who thrive on bank loans— and, from time to time on the central bank’s magnanimity to either reschedule or get a most favourable term of repayment of loans—do not exploit a noble measure of the government meant exclusively to overcome the crisis period. We are glad that a caveat has been imposed as a result of the sudden rush for loans, which requires the banks to provide the credit support to the borrowers, given their outstanding loans are until March 31. This must be honestly followed.