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Don’t use musclemen, private banks warned

Special Correspondent

NEW DELHI: Sharing the concern of the members over the use of musclemen to recover outstanding loans, Union Finance Minister P. Chidambaram on Monday informed the Rajya Sabha that the government would come down heavily on private banks that resorted to such uncivilised practices.

Replying to a debate on the Payment and Settlement Bill, 2007, in the Rajya Sabha, Mr. Chidambaram said musclemen were used by private banks and not public sector banks. “If I come across an instance of a PSU banker using these rough measures to make a loan recovery, I will sack him the very next day,” he said.

There were civilised ways of recovering loans, which should be adopted by all banks.

The Reserve Bank of India had already come out with strict guidelines to curb the menace, but the government would take further steps, if required.

Mr. Chidambaram said his Ministry and he personally were monitoring the lending by banks, including educational loans and those to minorities. In the last two years, the credit growth had been hovering around 30 per cent, and the RBI recently took some measures aimed at cooling the sentiment as the market was overheating.

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