BENGALURU: It is time the lawmakers and the Reserve Bank of India revisited the lending guidelines and procedures and took necessary remedial measures to ensure that public money was well secured before disbursement, the Karnataka High Court has said. Justice P S Dinesh Kumar made this observation while dismissing two petitions filed by Dr Bavaguthu Raghuram Shetty, an NRI businessman, residing in Kadri in Mangaluru. Shetty had questioned the endorsement issued by the Bureau of Immigration not permitting him to travel to Abu Dhabi, UAE, and the Lookout Circulars (LOCs) issued by the Bank of Baroda (BOB) and Punjab National Bank (PNB). He is liable for repayment of about Rs 2,800 crore to banks.
When the court called upon the advocates of the banks to explain on what security the banks permitted such large exposure, they said the companies to which loans were advanced were ‘listed companies’ in London Stock Exchange and the share value had shown that these firms had high net worth.
The court then noted, “Tangible assets, if any, mortgaged in favour of banks and their valuation is not forthcoming.”It observed that the loan amount was more than one-third of the annual budget of a State like Sikkim. If public sector banks are permitting such large exposure without adequate securities, it is a matter of great concern and it will have a serious adverse impact on the economy of this country. Hence, the petitioner is not entitled for relief, the court said, while reserving liberty available to him to approach bank authorities and explain that LOCs have been wrongly issued.
Money from country used in foreign biz: HC
On the contention of Shetty’s counsel that the right of petitioner to travel is paramount, the court said that Rs 2,800 crore belongs to India in general and the depositors in particular. This court cannot lose sight of the fact that money belonging to this country has been utilised by the petitioner in a foreign country to run his business. No material is produced to show that money lent by BOB and PNB has resulted in any development of this country, the court said.
“On the other hand, as on date, it has become a bad debt and public sector banks are fighting litigations in India as also in UAE to recover the same. It is no doubt true that a citizen of this country has a right to travel. But I hasten to add that persons who take public money have a sacred duty to repay it too,” the court observed.On the main argument advanced on behalf of the petitioner that he was ‘only a guarantor’, the court said that a guarantor was equally liable to repay the debt.