In the backdrop of the recent scams reported in the banking sector, citizens have flagged concern on various aspects of business-banker nexus and the gaps that exist, particularly of collusive corruption existing among (PSBs).
According to a survey conducted by citizen engagement platform, LocalCircles, 53 percent respondents stated that collusive corruption between businesses and staff at PSBs in India is a norm, while 43 percent said it happened only in limited cases of loans/credit.
Furthermore, 52 percent citizens recommended that effective vigilance system is required, 32 percent highlighted privatisation of PSBs as the solution, while 13 percent said induction of top private sector professionals in the senior management and board would help tackle the issue.
Around 89 percent respondents opined that if a time-bound, systematic external audit of loans and credit with common auditing standards should be done at all PSBs to find fraudulent transactions in the system.
To prevent defaulters from escaping the law and fleeing the country, 67 percent citizens said banks should ask for a passport as collateral for loan payment defaulters and each time they want to travel overseas, the document may be released based on account status.
Punjab National Bank (PNB) in February detected a 1.77 billion dollar fraud, whereby noted jewellery designer Nirav Modi had acquired letters of undertaking to avail loan from various banks.
In this regard, nearly all respondents (97 percent) stated that the Reserve Bank of India (RBI) must demand an undertaking in a time-bound manner by March 31 from the boards of all banks about the current status and risk type level of all such letters sanctioned by the banks.
Citizens also suggested that mandatory linking of SWIFT with Core Banking Systems by all banks, more attention and detailing of contingent liabilities by banks and more robust review by auditors must be undertaken. Some citizens also highlighted the need for high quality independent external monitors placed within the bank and given direct access to the board as well as all customer and citizen complaints.