Sebi to rein in wilful defaulters; no raising of public funds by debt dodger

New Delhi: Finance minister Arun Jaitley and RBI Governor Raghuram Rajan were speaking to the media after Reserve Bank’s Board Meeting here attended by the finance minister.

“We don’t want to create a situation where we overstate the crisis and in the process, the whole activity of lending for growth itself starts suffering because people become extraordinarily defensive. We don’t want to reach that situation.
“So it’s that limited category where there is some kind of a prima facie misconduct or misdemeanor, which has taken place by the individual. Its those areas which will be looked into differently,” Mr Jaitley said.

Echoing similar views, Mr Rajan said there is a need to be “careful” going forward, so that criminal actions are penalised, but there is no “broad fishing expedition which then becomes a reason for banks to get worried about making loans which then hamper the recovery and hamper the absolutely important infrastructure investment that have to take place”. “So as a country, as a system, we have to draw that balance very carefully and we are hopeful that we can manage that,” he said.

On the same day, markets regulator Sebi, whose board was also addressed separately by Mr Jaitley, announced a multi-pronged clampdown on “wilful loan defaulters”, by barring them from raising public funds, as also from taking control of listed firms and holding board positions — a move that would disqualify beleaguered Mallya from various posts.

Besides, defaulters — including individuals and the companies as well as their promoters and directors — would be debarred from setting up or being associated with the market entities like mutual funds and brokerage firms.