Qualitative Lending Is The Need Of The Hour

Qualitative Lending Is The Need Of The Hour

- Saumyadeep Mukherjee

Punjab National Bank (PNB), India’s second-biggest state-run lender, stunned the country’s financial sector when it announced a fraud worth ₹11,400 crore ($1.8 billion) and implicated designer jeweller Nirav Modi of the Gitanjali Group, along with Ami Modi, Nishal Modi and Mehul Choksi.

PNB, which suspected the fraud, began digging into transaction history as branch records did not show any such facility granted to the firms and finally filed a complaint with the CBI on January 29, 2018. The PNB fraud-case did not only shock the entire economy but also served as an eye-opener for exposing the extent of corruption in the Indian banking sector.

Corruption in the banking industry

Corruption is a persistent problem in India. According to the Corruption Perceptions Index prepared by Transparency International and published in 2017, the county is ranked 81 among 175 countries.

There have been various instances when a bank chief’s tenure has been cut short by the government for alleged irregularities. There have been cases of arrests associated with the banking sector as well. Such rampant corruption in the banking sector impacts the overall economy. It leads to depletion in credentials which leads to lack of trust in the economy and defers the general public from saving or investing. When someone like Usha Ananthasubramanian (former CEO of PNB) is found to be involved in the PNB scam, it certainly crushes public trust in the banking system.