Opinion

Catch fraudsters, But after due process



The RBI guidelines were issued at a time when the banking system was grappling with a bad loans crisis that had strangled commercial lending. The ensuing clean-up of bank balance sheets and corporate deleveraging has improved credit flow. The insolvency resolution mechanism has also helped free up capital locked in zombie companies. The policing imperatives remain. But there is now less pressure on the banking industry to be trigger-happy about declaring a defaulting account as fraudulent. Further improvements in debt recovery will render fraud detection a more exact science.



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