......Most defaults were “technically settled” at a fraction (sometimes one-fourth) of the principal sum lent out. The rest was written off under oral instructions “from above”. Even though the RBI was in the dark about the quantum of such happenings, the finance ministry was quite aware of this. Its own department, – the Central Economic Intelligence Bureau (CEIB) – kept track of such borrowings, and it was from the CEIB that this correspondent got several details. However, no action was taken against the bank managers, the companies or their officials. Multiply such stratagems several-fold, and you can then appreciate the numbers presented by Chakrabarty in his talk on November 11 this year (see table). It can be seen that just 181 companies accounted for almost 78% (`10,596 crore) of big frauds (of over `50 crore) and involved a period of at least five years for “crystallisation” of the loans as bad debts. Of these,..........
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