Bailing out big loan defaulters!
THE central bank is learnt to have taken an initiative to what it terms 'restructure' large loans advanced to big borrowers to enable them to service their debts better. It is worthwhile to note that this is yet another move to favour big bank borrowers though many of them have defaulted on repaying their loans despite the fact that earlier they were allowed to reschedule their loans. Clearly, this is indicative of the central bank's leaning to help big borrowers out of their loan burdens at the expense of financial discipline.
We recall that in the face of the borrowers' failure to duly service their loans under various circumstances, the authorities in 2002 had even written off many defaulting loans. Again, considering the volatile political situation, defaulters were given the privilege of rescheduling at the end of 2013. Seeing that another novel measure of restructuring has been devised to bail out mainly the big defaulters, question arises as to the efficacy of these rescue packages under various names. Rather than discouraging, is not the central bank in a way encouraging the chronic loan default culture against which its governor had shown a seemingly uncompromising stance hardly a month before?
Evidently, the leniency shown so far towards major bank debtors has gone down the drain. It is time the central bank came down hard on these incorrigible defaulters while at the same time treated small borrowers, who are mostly regular, with respect. This should be done in the interest of establishing financial discipline in the banking sector.
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