Chennai, June 21 (IANS): To reign in the ballooning non-performing assets (NPA) in public sector banks, chairman and managing directors (CMDs) and executive directors (EDs) should be made accountable, a leading bank union has demanded.
"A system has to be evolved to ensure accountability and responsibility on the part of the CMDs and EDs of the public sector banks in respect of sanctions of credit etc. which ultimately become distressed assets," All India Bank Employees' Association (AIBEA) said in its pre-budget memorandum submitted to the government.
"We are making the demand formally for the first time though we have been asking for the same for a long time," C.H. Venkatachalam, AIBEA general secretary told IANS Saturday.
He said the CMDs and EDs of government-owned banks are not subject to service/conduct/disciplinary rules on the pretext that they are hired on contract.
"But they do grant loans and there is nothing to hold CMDs and EDs responsible if their decisions hurt the banks and the loans turn bad," he said.
Recently AIBEA released a list of 406 bank loans amounting to Rs.70,300 crore that went bad and had demanded declaration of wilful default a criminal offence and investigation of the nexus between the borrowers and bank officials.
"A review should be made to identify the beneficiaries whose debts/loans availed in the banks with interest was written off," said the union in its pre-budget memorandum.
The AIBEA has also demanded that the bank loan defaulters should not be permitted to contest assembly or parliamentary elections.
According to AIBEA, floating of asset reconstruction companies (ARC) as a tool to reduce non-performing assets (NPA) should be discouraged and the NPAs should be actually recovered.
"Auction of NPAs should also be stopped as the same involves huge write offs ultimately resulting in heavy losses to the banks," the union has said.