Willful default is much more than business failure, bank frauds: Jaitley

Cornelia Mascio
Febbraio 25, 2018

The decision taken by the Congress-led UPA government to tax British telecom multinational Vodafone Group retrospectively was an "erroneous" one, the likes of which the ruling Narendra Modi government would be loath to repeat, Union Finance Minister Arun Jaitley said on Saturday at an event in the national capital.

"But unfortunately in the Indian system, we politicians are accountable, the regulators are not". He also slammed the lack of ethics among companies and the lackadaisical attitude of bank managements as well as supervisory bodies including auditors and regulators, which provided a fertile ground for fraudsters to thrive. And similarly if you had top managements who were indifferent to what was going on, or were unaware of what was going on, you had at least multiple layers of auditing system which chose to either look the other way or do a casual job. He also said tighter laws need to be implemented to ensure criminal acts in business lead to punishment, wherever the culprit is. "Therefore I think who did what, will eventually find out in the course of investigation", he said.

The public sector PNB had earlier this month detected a 1.77 billion dollar scam in which Nirav Modi had acquired fraudulent letters of undertaking from one of its branches in Mumbai for overseas credit from other Indian lenders.

On rising case of frauds, Jaitley said, "Cases of willful default is something which is much more than a business failure and also bank frauds". He said, "Regulators have a very important function, regulators ultimately decide the rules of the game and they have to have a third eye which should be perpetually open".

"Rather than always have a close look at what government's are doing, Indian industry needs to look inwards and to a fair bit of introspecting", Jaitley said.

The finance minister added that the Insolvency and Bankruptcy Code (IBC) was changing the lender-borrower relationship and bringing in credit discipline. "It is incumbent on us as a state, till the last legitimate capacity of the state, to chase these people (fraudsters) to the last possible conclusion to make sure the country is not cheated", Mr Jaitley said while addressing the annual meeting of Association of Development Financial Institutions in Asia & Pacific (ADFIAP).

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