The Cabinet has recommended an ordinance to empower the RBI to instruct banks to act against top 20-25 loan defaulters. This is part of a series of steps to help banks reduce bad debts which are accumulating and adversely affecting the financial mood in the country. The ordinance is expected to receive a nod from President Pranab Mukherjee in a day or two. A staggering Rs 2.5 lakh crore has been lost by public sector banks. This is bigger than the money lost in the 2G scam and coalgate, but it is yet to capture the imagination of citizens. The measures initiated by the Centre are primarily aimed at bringing to book large defaulters, many of whom, can afford to pay back the money. Prime Minister Narendra Modi has positioned himself as pro-poor and his demonetisation drive, although controversial, helped reinforce this image. The ordinance to empower banks is a continuation of this drive to prove that the government does not favour or protect the rich. Going after Vijay Mallya, who owes banks upwards of Rs 9,000 crore, is the right thing to do, but what about other defaulters who are ensconced in AC offices in the country? The Centre must not only continue with measures to smoke out defaulters, but must relentlessly pursue them until every penny is paid back.
