The Hindu : Tamil Nadu / Chennai News : Observe principles of good lending, banks told

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Sunday, Mar 23, 2008
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Observe principles of good lending, banks told

Special Correspondent

CHENNAI: Financial institutions should observe the principles of good lending while approving loans or else they would end up with a bundle of papers, said J. Chandrasekaran, chief general manager, State Bank of India Local Head Office on Saturday.

Addressing the members of Institution of Valuers (IOV) Chennai Branch, after releasing a handbook on “How to curb frauds on banks: an analysis,” he said while lending against a property, banks should look at the borrower and understand his business. The IT sector has flattened out and hence more caution should be exercised.

Bankers are in a race to expand their business fast and have outsourced most of the work to outside agency. Taking advantage of the situation, unscrupulous elements have taken loans by pledging fake documents. “It is not a reckless business. You should know what risk you are taking. You should talk to the valuers’ to ascertain their views too,” he said.

Receiving the first copy of the handbook, Su. Arunachalam, deputy inspector general of police, Narcotics Intelligence Bureau CID, said that bankers should verify the genuineness of the documents through different sources and deposit certificates with the issuing authorities. Doubts about property should be cleared by going through ‘chitta’ and field measurement book, etc. He also said while the number of fraudulent cases had doubled in the recent past, the total sum involved was less than in the previous years. This was due to the caution adopted by the banks in huge disposals. “The same type of caution has to be adopted for all loans,” he added.

C.H. Gopinath Rao, former national president, IOV, asked the public to be cautious while buying vacant plot/land as the same site can be sold to other persons too.

He also asked the bankers and valuers to visit the property to ascertain its genuineness or else it would add up to the bank’s non-performing assets.

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