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Foiling NPAs

Foiling NPAs

With the Look Out Circulars issued against debt-ridden Bhushan Power and Steel Limited (BPSL) chairman Sanjay Singhal and his wife and vice-chairman Aarti Singhal by CBI, the immigration authorities at all airports and entry-exit points across the country will notify CBI should Sanjay and his wife try to elude from the country. CBI had earlier this month registered a case of cheating amounting to Rs 2,348 crore against Singhal and the others including unknown public servants. Subsequently, CBI carried out searches at 18 locations across cities connected to the company. BPSL sits on the maturity point of the corporate insolvency resolution process (CIRP) initiated against it back on July 26, 2017, on a plea of PNB. The resolution plan submitted by JSW Steel is yet to be approved by the principal bench of National Company Law Tribunal (NCLT) which reserved its order on Tuesday. Embroiled in heavy debts with a huge loan default of Rs 47,204 crore availed from 33 banks and financial institutions between 2007-14, BPSL was admitted in the New Delhi branch of NCLT for CIRP. Sanjay Singhal had made a last-minute offer to pay the financial creditors in full and take the company out of CIRP, under section 12 A of the IBC. The FIR filed by CBI also alleges that BPSL was one of the few companies to have paid kickbacks to those owned and controlled by Deepak and Rajiv Kochhar in a quid pro quo deal for getting loans sanctioned from ICICI bank headed by Deepak's wife Chandana Kochhar at the time. The FIR reveals that ICICI bank had disbursed loans amounting to Rs 586.6 crore to BPSL between 2007-14. While ED remains in-charge of inquiring into the matter, this certainly reveals a nexus of cheating and criminal conspiracy which involves forging documents, falsification of accounts on a major scale by eminent industrialists and top-officials such as Singhal, Kochhar, and even the Sandesara brothers of Sterling Biotech currently on the run for being wanted in Rs 8,100 crore bank fraud. While investigating agencies gradually uncover the nexus, high-amount NPAs on top of money-laundering instances surface with absolutely devastating misuse of authority for personal gains. While the IBC Act, 2016, has been instated to combat insolvent companies and PMLA Act, 2002, to tackle money-laundering cases, the perpetrators have largely eluded from authorities – escaping the country – resulting in enactment of FEO Act, 2018. Cross-validation of loans and financial health of companies has to be regulated to prevent a drastic NPA and money-laundering scenario. The problem of NPAs has to be tackled from the root – loans granted despite sketchy remarks with falsified periodic validations. Having a cure for such adversities should not eclipse the need for preventive measures to avoid recurring instances of such adversities in the first place.

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