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Millennium Post

Come down hard on bank frauds

The Supreme Court has rightly castigated bank offences saying they are crimes against not just the financial institutions themselves but also against the society at large. It is indeed commendable that the apex court has highlighted the harmful impact of bank frauds and monetary bungling, particularly the negative effect they have on unsuspecting customers, who end up on the wrong side of the transactional stick. The SC’s ruling that bank offences must not merit any leniency is certainly one important step towards ensuring a society considerably rid of credit and debit crimes, which often result in depletion, or total loss, of other people’s, particularly the old pensioners’ hard earned savings. The bench of justices SJ Mukhopadhyaya and Ranjan Gogoi have accurately pointed out that such offences involve ‘moral turpitude committed by public servants while working in that capacity’ and fraudulence in banking must not be excused even after the amount has been refunded, since the hard line would possibly act as a deterrent to prevent future crimes of a similar nature. The court states, ‘The offences when committed in relation with banking activities including offences under Sections 420 (cheating), 471 (using forged document) have harmful effect on the public and threaten the well-being of the society.’

In a wise decision, the court has expanded the horizon of suffering resulting from bank frauds to not just the banks themselves but also the millions of ordinary people risking their investments and savings with the monetary organisations, and therefore, in order to bring down the rate of banking offence, the law must take cognisance of the wider – legal, ethical, social and emotional – consequences of their unlawful activities. Moreover, even the governor of Reserve Bank of India, Raghuram Rajan, is pushing for banking reforms that try to minimise abuse of the benign loan restructuring regime and would soon make it mandatory for all banks to stick to uniform loan classification norms. Arguably, the banks’ recent proactive efforts to make public the defaulters information as well as to ‘name and shame’ the serial offenders are also measures to check the rampant rise in credit and loan crimes that has been bogging down the financial sector, leaving it in a tizzy over possible cyber threats. However, while it is perfectly alright to step up the regulations and tighten the rules, the new norms must not be used to intimidate and discriminate against genuine but smaller entrepreneurs.
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