Banks harasses common people while sanctioning loans but went extra miles to oblige privilege-When Shatrujeet Kapur couldn’t get loan for her daughter,s higher education.
Gustakhi Maaf Haryana-Pawan Kumar Bansal.
Extracts from the book “Wired For Success -How a Top Cop Turned Around Two Discoms. During his tenure as CMD of Discoms Haryana ,Kapur discovered that banks were liberal in sanctioning loans to power plants even without assessing the feasibility of these projects.This prompted him to share with readers the bitter experience he had while trying to get bank loan for his daughter’s higher education.Recall Kapur “After earning a baechelor’s degree in technology (computer science)from a reputed Institute in India.,she took the GRE and secured admission to a good university abroad.Looking at the substantial expenses involved,we decided to seek a loan from the bank.The manager informed us that the admission Letter and collateral security were mandatory requirements.In an effort to meet these prerequisites,we offered to pledge the parental house inherited by my wife from her father.However,the bank refused to accept the transfer letter issued by the urban development authority of the government and insisted on a ‘registered sale deed’.
I also had a piece of Land in my name but was also deemed unacceptable.We approached several banks but the response remained the same .Fortunately our daughter ultimately did not require the loan as she secured assignments on a regular basis and near complete-fee waivers.”.Kapur writes that point he was making was that getting the bank loans in India is Herculean task for ordinary citizens but that apparently is not the case if you want borrow a few thousand crores and invest in a major project.
A notable example of this disparity is evident in the power sector,where thirty – four coal- based power plants in the country,with a cumulative caps of 40,130 MW,were considered as ‘stressed ‘ by the government as of September 2017.Public money to the tune of Rs 1.77 Lakh crore was locked up in these projects in the form of bank loans,and there appeared no solution in sight.The majority of these power projects neither had power purchase tie- ups in the form of PPAs nor sufficient fuel supply arrangements,rendering them financially unviable.It is evident that the feasibility of these projects was not actually assessed during the planning phase.Surprisingly ,the banks failed to exercise due diligence and extended substantial Loans without insisting on the necessary PPAs and corresponding fuel supply arrangements.
The obvious question that arises is how financial closure was permitted in such a large number of cases when banks typically demand extensive even for approving small educational loans.The reason behind this discrepancy is not difficult to discern.The promoters of these ‘stranded ‘ projects are affluent people,and the rules that apply to common individuals do not seem to apply to them,thereby reinforcing the notion that privilege often shapes the application of rules.