Big West Bengal deposit-taking firm defaults on repayments

live Mint :Romita Datta  |  Manish Basu Wed, Apr 17 2013. 11 45 PM IST

CMD’s arrest ordered, Saradha Group on verge of collapse; more such firms likely to collapse in same way

Kolkata: The time bomb that has been ticking away in West Bengal may be about to go off.

One of eastern India’s biggest deposit-taking companies—the Saradha Group—is on the verge of collapse. The state administration has ordered the arrest of its chairman and managing director (CMD) Sudipta Sen for defaulting on repayments.

“The honeymoon is over—the chief minister (Mamata Banerjee) wants him arrested,” said a key government official who did not want to be identified. “We are confident that we will be able to nab him in a day or two.”

Sen, who according to the state administration is on the run, could not be contacted for comment.

More are likely to collapse in the same way even before the state promulgates a proposed law to contain the growth of deposit-taking companies, said a finance department official, asking not to be named.

This could happen within days, according to this official.

It isn’t immediately known how much money the Saradha Group owes its depositors. According to some estimates, including those of the state administration, it could run into thousands of crores of rupees.

Pressure on the group’s finances forced it to wind up, over the past few weeks, at least 10 media organizations—newspapers and television channels—that it had launched or acquired since 2010-11.

The closure made at least 1,000 journalists and technicians redundant in Kolkata, making it the biggest layoff in the media industry in eastern India.

Trinamool Congress leaders such as general secretary Mukul Roy and Partha Chatterjee, the state’s minister for commerce and industries, are looking for investors to rescue some of the media organizations that have closed.

The administration swung into action on Wednesday after at least 200 commission agents of the Saradha Group from across the state came en masse to Kolkata to meet Roy.

They asked for the state government’s immediate intervention to recover money from the group, which, according to these agents, started defaulting on repayments last month.

In the event of defaults, agents typically face the ire of depositors because they mobilize money largely on the strength of their own credibility.

The state government assured them that it will take necessary steps to seize all assets of the Saradha Group by the weekend, the agents said after their meeting with Roy. Even so, they fear the state may not be able to recover anything from the 100-odd companies that the group ran.

The group management had already started liquidating assets and there may not be much left on the books of its firms, they said.

Debasish Banerjee, an agent from Sonarpur in Kolkata’s suburbs, said Rs.6 crore was immediately required to repay matured deposits. “Our team leaders are scared of being lynched,” he added.

Another agent, Shaukat Ali from Murshidabad, said agents were initially asked to settle repayment claims on their own from fresh deposits collected by them, “but we soon realized that it was impossible for us to sustain that for a long time”.

Ali, who along with his sub-agents used to collect Rs.60-70 lakh a month until the end of last year, said he and other agents feared they would soon be driven from their homes by the depositors.

“Some agents have already fled their homes,” he said.

Agents from the northern part of West Bengal said the Saradha Group started defaulting on repayments in January. Some cheques bounced because there wasn’t enough money in the group’s bank accounts, they said. These agents refused to be identified.

Some agents managed to get an audience with Sen at his office in Kolkata last week. They were told they would be given power of attorney, or legal authority, to sell land held by the company to repay depositors, said an agent from Dakshin Dinajpur district. He did not want to be identified. It is not known how much land the group owns.

While the agents of the group fear an imminent collapse, this hasn’t stopped several other companies in West Bengal from raising public deposits in the name of fictitious business ventures, selling instruments that are beyond the jurisdiction of India’s securities market and banking regulators.

Most of the older deposit-taking groups were founded in 2007-08, and the instruments they initially sold were mostly of five-year maturity. These deposits are now due for repayment, according to the state finance department official.

Historically, the collapse of a deposit-taking company leaves a trail of ruin and suicide in its wake. The biggest such collapse in West Bengal thus far was that of Sanchayita Investments, a partnership firm that went bust in the early 1980s. A large number of its depositors killed themselves after they failed to recover their savings.

S. 269SS not applies to cash loan taken by Partner from firm

Issue - The assessee had taken the amounts from four firms which were found to be in cash and the Assessing Officer has considered these payments were in violation of Section 269SS of the Act. Stand of assessee is that the amounts were taken in his capacity as partner and it cannot be taken as an independent transaction and there is no violation of Section 269SS of the Act.

Held - Referring to R.M. Chidambaram Pillai (supra); Kum. A.B. Shanti (supra); Lokhpat Film Exchange (Cinema) (supra), Tribunal held that there is no separate identity for the partnership firm and that the partner is entitled to use the funds of the firm and that the assessee acted bonafide and that there was a reasonable cause within the meaning of Section 273B of the Act. We do not find any error or legal infirmity in the order of the Tribunal warranting interference. The substantial question of law raised in this appeal is answered in favour of the assessee and the Tax Case (Appeal) stands dismissed. No costs.

HIGH COURT OF MADRAS

Commissioner of Income-tax
v.
V. Sivakumar

Tax Case (Appeal) No. 279 of 2010
Date of Pronouncement – 11.02.2013

JUDGMENT

Mrs. R. Banumathi, J. – The Revenue has preferred this appeal on the following substantial question of law:-
“Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in deleting the levy of penalty by the Assessing Officer under Section 271D of the Income Tax Act, 1961, even though the advance has been accounted as loan and interest debited?”

2. The assessee was a partner in four firms and Proprietor in Reliance Realtors. In the assessment year 2005-2006, assessee had taken loan from the four firms which were found to be in cash. The Assessing Officer initiated penalty proceedings under Section 271D of Income Tax Act and imposed penalty of Rs. 18 lakhs. The Commissioner of Income Tax (Appeals) dismissed the appeal (ITA.No.68/07-08) and assessee preferred further appeal (ITA.No.142/Mds/08) before the Income Tax Appellate Tribunal. Tribunal remitted the matter to the Assessing Officer to give a definite finding whether the transaction was between the firm and partner. The Assessing Officer passed a fresh order (17.07.2008) that the assessee individual was a partner in four firms from where funds had been advanced to the assessee and imposed a penalty of Rs. 18 lakhs. In the appeal (ITA.No.89/08-09) preferred by the assessee, Commissioner of Income Tax (Appeals) allowed the appeal holding that the transactions between the partner and the firm do not partake the character of a Loan or Deposit and therefore, there is no applicability of the provisions of Section 269SS of the Act. The further appeal (ITA.No.408/Mds/2009) preferred by the Revenue was dismissed by the Tribunal on the finding that the assessee acted bonafide and that there was a reasonable cause within the meaning of Section 273B of the Act.

3. Mr. N.V. Balaji, learned counsel for Revenue submitted that though the assessee is partner of the firms, he has taken loan from the firms by cash in his capacity as Proprietor of Reliance Realtors and the Assessing Officer had recorded factual finding and in view of the consequences of violation of Section 269SS, justified in imposing penalty under Section 271D of the Act. Learned counsel for Revenue endeavoured to distinguish the cases relied upon by the Tribunal and submitted that the Assessing Officer has recorded factual finding that money has been advanced from the firms as loan and the same was debited from the accounts of the proprietary concern which would show that the transactions between the firms and the assessee were not in his capacity as a partner and while so, Commissioner of Income Tax (Appeals) and the Tribunal were not correct in saying that the transactions were between firms and partner and prayed that the substantial question of law be answered in favour of the Revenue.

4. We have heard Mr .M.P. Senthil Kumar, learned counsel appearing for the assessee.

5. The assessee had taken the amounts from four firms which were found to be in cash and the Assessing Officer has considered these payments were in violation of Section 269SS of the Act. Stand of assessee is that the amounts were taken in his capacity as partner and it cannot be taken as an independent transaction and there is no violation of Section 269SS of the Act. The partnership firm has no separate legal entity. There is no separate identification between the firm and the partner. Tribunal relied upon the decision in CIT v. R.M. Chidambaram Pillai [1977] 106 ITR 292 wherein the Hon’ble Supreme Court held that “there cannot be a contract of service in strict law between a firm and one of its partners, so as to consider the salary paid to the partner as income from the salary and held that for the purpose of Sections 269SS and 269T, the firm and partners cannot be considered to be separate entity”. The Hon’ble Supreme Court further held that “payment of salary to a partner represents a special share of the profits and salary paid to a partner retains the same character of the income of the firm” and deleted the penalty.

6. In CIT v. Lokhpat Film Exchange (Cinema) [2008] 304 ITR 172 (Raj), it was held that partnership firm is not a juristic person and for inter relationship different remedies are provided to enforce the rights arising out of their inter se transactions and that the inter se transactions between the partner and firm are not governed by the provisions of Sections 269SS and 269T of the Act.

7. Relying upon the decisions in R.M. Chidambaram Pillai’s case (supra); Asstt. DIT (Investigation) v. Kum. A.B. Shanthi [2002] 255 ITR 258; Lokhpat Film Exchange (Cinema)’s case (supra), Tribunal confirmed the finding of Commissioner of Income Tax (Appeals) that partnership firm is not a juristic person and there is no separate identity for the firm and partners and that the transactions between the firm and the partner cannot be brought within the meaning of Section 269SS of the Act.

8. Apart from the issue about the separate entity, being a partner the assessee had drawn amounts from the firms and there are no reasons to doubt the genuineness of the transactions. This Court in CIT v. Kundrathur Finance & Chit Co. [2006] 283 ITR 329 following the decision of the Hon’ble Supreme Court in. Kum. A.B. Shanthi’s case (supra) held that “if there was genuine and bonafide transaction and the tax payer could not get a loan or deposit by account payee cheque or demand draft for some bonafide reason, the authority vested with the power to impose penalty has a discretion not to levy penalty”.

9. In CIT v. Deccan Designs (India) (P.) Ltd. [2012] 347 ITR 580, loans were taken from sister concern under condition business exigency. Referring to Kundrathur Finance & Chit Co.’s case (supra); CIT v. Balaji Traders [2008] 303 ITR 312 (Mad) and CIT v. Ratna Agencies [2006] 284 ITR 609 (Mad.), the Division Bench of this Court dismissed the appeal holding that “there were enough reasons offered by the assessee to justify the cash transactions which it made with its sister concern” and that consequences of violation of Section 269SS is not attracted.

10. In CIT v.. Lakshmi Trust Co. [2008] 303 ITR 99, the Division Bench of this Court held that “if there were genuine and bonafide transactions and the tax payer could not get a Loan or Deposit by account payee cheque or demand draft for some bonafide reason, the authority vested with the power to impose penalty has a discretion not to levy penalty”.

11. Referring to R.M. Chidambaram Pillai (supra); Kum. A.B. Shanti (supra); Lokhpat Film Exchange (Cinema) (supra), Tribunal held that there is no separate identity for the partnership firm and that the partner is entitled to use the funds of the firm and that the assessee acted bonafide and that there was a reasonable cause within the meaning of Section 273B of the Act. We do not find any error or legal infirmity in the order of the Tribunal warranting interference. The substantial question of law raised in this appeal is answered in favour of the assessee and the Tax Case (Appeal) stands dismissed. No costs.

Dishonor of cheques and Remedies

Adv. Ashish Baheti   : Taxguru:14 Apr 2013 05:14 AM 


According to statistics of Supreme Court; there are over 40 lakh pending cases of cheque bounce in the country. Lack of adequate knowledge has brought most of people in the situation of losing money. Here are some of the remedies a person can opt for while dealing with issues pertaining to return of cheque:

Penalties for dishonor of cheques due to insufficiency of funds:

Section 138 of the Negotiable Instruments Act has provided for penalties in case a cheque gets dishonored for insufficiency of funds. When a cheque is drawn by any person from his account for payment to another person, it can get bounced due to the following reasons -

1.   Insufficiency of funds.

2.   The cheque amount is exceeding the agreed amount arranged to be paid from that account.

In the above mentioned cases, the person drawing the cheque is deemed to be the committer of offence and is liable to be punished under the act for a period of imprisonment that can extend up to two years. The person whose cheque gets dishonored is also liable to pay a fine which can be up to twice the amount of cheque.

However, in order to drag the drawer of the cheque for penalty it must be understood that following conditions need to be fulfilled -

1. Cheque should be presented to the bank within a period of three months (earlier it was 6 months) from the date mentioned.

2. In case the cheque gets bounced, the holder of the cheque should ask for the payment by giving a legal notice to the drawer in writing within 30 days of the receipt of information of nonpayment by the bank.

3. Even after receipt of notice if the drawer of the cheque fails to make the payment within the stipulated time, which is 15 days from the receipt of notice.

How to Recover the Money?

The notice sent to the drawer should be legal as explained earlier the same should mention that the cheque was dishonored and payment needs to be made.

This notice should be sent by registered post.

Even after 15 days of receipt of the notice, if the person fails to clear his dues, the payee has a right to file a criminal complaint under Section 138 of the Negotiable Instrument Act.

The complaint should be registered within one month of the expiry of the notice period.

Exemptions:

A cheque that was drawn in the name of the charitable trust as a donation or as an application amount of shares does not come under the purview of dishonor. 

There might also be other reasons for dishonor of cheque such as alterations or corrections in the cheque or difference in signature. In such cases, it is not termed as an offence. Banks might impose a penalty, though.

It should always be remembered that cheque should be a liability and legal enforceability on the person who has issued it

 One should always follow procedures like legal notification and demand of funds from the drawer.

Most of the pending cases in courts are because of lack of legal procedure followed.

A simple understanding of these rules can save you from cheque dishonor cases that happen in day to day life.

——————————
About The Author: -
Adv. Ashish Baheti is an LL.B, MBA (Finance) and a Tax Consultant. He has spent over 20 years in Taxation Consultancy and Financial Consultancy Sector. 

Over 1 lakh e-auctions for NPA properties expected in 2013-14

B S :Priya Nair  |  Mumbai  April 15, 2013 Last Updated at 15:39 IST

Retail, agricultural, commercial and industrial NPA properties to be e-auctioned

Indian banks are expected to conduct over one lakh e-auction transactions during financial year 2013-14 to sell properties of Non-performing Assets (NPAs), 

Residential, agricultural, commercial and industrial properties are likely to be sold through the e-auction route, with the first two accounting for the largest number in terms of transactions,

With the Ministry of Finance making it mandatory for all commercial banks to move from physical auctions to e-auction mode for all NPA cases under the Debt Recovery Tribunal (DRT), there will be a spurt in e-auctions in 2013-14. Also, the Ministry of Finance wants that NPAs under SARFAESI Act (The Securitization and Reconstruction of Financial Assets and Enforcement of Securities Act, 2002) should gradually move to the e-auction mode, but has not made it mandatory.

The focus of most banks now is on recovering dues from NPAs, as they have started impacting their profitability and margins.

As on March 31, 2012, net NPAs of 40 listed banks were Rs 61,558 crore, which rose to Rs 92,398 crore as on December 31, 2012, the release said.

Explaining the advantages of e-auction over the physical process, D K Jain of NPAsource.com said, “E-auctions offer multiple advantages like lower cost, greater participation, it saves time and allows better price realization for banks. Any interested party from India or even abroad can register themselves under the Reserve Bank of India regulations and participate in an e-auction of NPAs unlike the physical auction system where the interested parties have to travel to the venue where it is going to take place. This automatically leads to a significant increase in the number of participants, reduces costs and eliminates or curtails manipulation by a small cartelised group.”

Until now, most banks were not participating in e-auction due to the lack of technological know-how and competence. But now various online portals are offering these services, Jain added.

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Banks asked to go slow on writeoffs

By Manju AB Apr 14 2013 , Mumbai

FinMin, RBI concerned over large loan recasts

The finance ministry has asked banks to go slow on writing off loans. In a recent meeting with bank chiefs, the ministry advised them to write off amounts equivalent to or less than cash recoveries in a particular year.

Certain banks have been writing off loans in excess of their cash recoveries to keep non-performing asset (NPA) portfolio low. The ministry is understood to have advised banks not to favour defaulters.

"The ministry had sought data for seven years to find out the kind of writeoffs banks have been doing. It was found out that mostly stressed assets of large borrowers were being written off, while in certain cases the prudential writeoffs were in excess of cash recoveries,” said a banker, who did not want to be named. His bank too has furnished NPA figures to the ministry.

Another senior banker, who too did not want to be identified, said, “In certain cases, banks were found shielding large borrowers and initiating action against smaller borrowers. Non-performing assets in the banking system has been the focus of the ministry ever since banks began reporting higher defaults.”

Naresh Takkar, managing director of rating agency ICRA, said: “Large leveraging and huge balance sheets are a concern. But not all entities availing of bank loans are over-leveraged. The slowdown in the economy is impacting cash flows of companies; project slowdown is causing cost overruns on all projects; payment cycles are getting elongated; and uncertainties continue to dog companies. Due to the macroeconomic scenario, even where highly-leveraged entities have begun divesting parts of their assets, debt levels are too high for such divestment to achieve substantial improvement in their credit profiles.”

According to ICRA, the credit outlook for metals & mining, construction, power and capital goods sectors will remain negative till such time that policy-related constraints are addressed and there is some meaningful pickup in the investment cycle.”

According to RBI estimates, gross non-performing assets in the Indian banking system are expected to cross 4.2 per cent of the gross bank credit, while restructured assets are expected to cross 5.5 per cent of gross advances by the end of March this year. The consolidated figure of NPAs and restructured assets can be finalised only after all the banks have declared their results.

Large restructuring of loans is also a major concern for the Reserve Bank. To dissuade banks from restructuring accounts that do not merit rescue, RBI has implemented higher provisioning norms from April 1.

Following the recommendation of the B Mahapatra Committee set up to investigate the rising trend of debt recasts, RBI decided to increase provisioning requirement for fresh restructured loans from 2.75 per cent to 5 per cent from April 1 to disincentivise banks from undertaking large restructuring. RBI felt that, in many cases, banks were window dressing books by restructuring loans without justification in order to keep their gross non-performing numbers low.

In addition, for the existing stock of restructured assets, it was decided to increase the provision requirement from 2.75 per cent to 5 per cent in a phased manner, that is, to 3.75 per cent spread over the four quarters of 2013-14, and then, to 5 per cent over the four quarters of the next financial year.

The committee also recommended withdrawal of the regulatory leeway for loan restructuring whereby loans restructured only once were considered standard assets. As the economy is yet to bounce back, the amount of restructured assets has also been increasing, leading to rising bad assets.

manjuab@mydigitalfc.com

British Airways told to pay Rs.90,000 for losing luggage in transit from Delhi to Milan

PTI  New Delhi,Indiatoday:  April 15, 2013 | UPDATED 16:52 IST

British Airways has been asked to pay Rs.90,000 as compensation.

British Airways has been asked to pay Rs.90,000 as compensation to a passenger for losing his luggage in transit from Delhi to Milan.

The South West District Consumer Disputes Redressal Forum noted that due to loss of baggage, the man had to purchase at huge cost articles of daily use for the duration of his and his wife's stay in Milan and is entitled to be compensated.

"We find that the bag was lost and complainant remained without the articles of their use which they had to purchase in a foreign country and thus complainant and his wife were compelled to spend a huge amount on the purchase of such articles.

"Moreover, complainant suffered inconvenience, harassment and mental agony due to loss of the bag for which he is entitled to be reasonably compensated, apart from the loss of his bag," the forum presided by Narendra Kumar said, directing the airline to pay Rs.50,000 to Delhi resident Balraj Taneja towards cost of articles he had to purchase in Milan and another Rs.40,000 as compensation and litigation cost.

Taneja, in his complaint, had said he had booked tickets to Milan from Delhi for his wife and himself.

When they had arrived at their destination, they found both their bags missing, he had said, adding that they had to purchase day-to-day usage articles at huge cost.

Nearly a month later, one of their bags was returned but in a damaged condition, while the other was never found, he had alleged and sought compensation for the loss.

The airline had opposed the claim for compensation saying their liability is governed by the Hague Protocol and Warsaw Convention on Air carriages and deficiency in service is not covered under these international laws.

The forum, however, rejected the airline's contention saying under the Consumer Protection Act there is no provision which limits or restricts their liability for deficiency in service.

Wilful defaulter: Who will bell the cat?

Kingfisher Airlines’s promoter Vijay Mallya owes around Rs7,000 crore to a consortium of banks, led by the State Bank of India. Photo: Mint

Live mint :Tamal Bandyopadhyay  Sun, Apr 14 2013. 07 12 PM IST

Banks ask for personal guarantees from high-profile promoters but it does not ensure timely repayment of debt

India’s finance minister P. Chidambaram wants banks to chase affluent promoters of sick companies who have a high-flying lifestyle and yet aren’t willing to clear banks’ dues. He hasn’t cited any instance, but the obvious provocation for his outbursts against rogue promoters seems to be loan default by groundedKingfisher Airlines Ltd. Its promoter Vijay Mallya—known as much for his love of the good life and the popular Kingfisher calendar as for Kingfisher beer—owes around Rs.7,000 crore to a consortium of banks, led by the State Bank of India (SBI).

The consortium in November 2010 had restructured the debt to throw a lifeline to the airline by stretching the repayment period, cutting interest rates, and even sanctioning a fresh loan. The banks also converted Rs.1,355 crore of debt into equity, at a 61.6% premium to the market price of Kingfisher Airlines’s stock then. Following this, banks got a 23.21% stake in the airline’s equity with a rider that they could not sell the shares for the next two years. In April 2011, when the debt was converted into equity, the price of Kingfisher stock was Rs.39.90; now the stock is trading at around Rs.7.60. It’s not difficult to calculate how much banks have lost on account of this. Mallya, meanwhile, has not lost his love for cricket, Formula One racing and other good things in life.

The phenomenon of promoters remaining healthy while their companies going down the drain is not new. A decade back, when the Board for Industrial and Financial Reconstruction (BIFR), the government agency to revive sick companies, was alive and kicking, bankers had seen industrialists junking theirMaruti cars and driving in Mercedes to attend meetings while their once-healthy companies were on a stretcher. Citibank NA in India used to send eunuchs to the houses of loan defaulters to sing and dance and embarrass them. Some banks have also exercised the option of sending musclemen to scare a defaulting borrower and putting up posters with photographs of the borrowers. These tricks can work for retail borrowers and small and medium enterprises but eunuchs cannot shame the high-profile, big-ticket borrowers and musclemen can’t scare them. They are Frankensteins, created by politicians and the banking system.

For the state-run banks, that make up three-quarters of the Indian banking industry, bad assets ballooned in fiscal 2013. At least three such banks have gross non-performing assets (NPAs) of more than 5% of their loans—a level last seen many years ago—and many more between 3% and 5%. (The latest available figures are for December; banks are yet to announce their earnings for the March quarter.) The gross NPAs of 40 listed Indian banks rose to Rs.1.79 trillion from Rs.1.25 trillion in December, up 43.1% from a year ago. After setting aside money, their net NPAs have grown at an even higher pace of, around 55%. According to a finance ministry note, some 7,370 cases of loan defaults have been reported by banks in fiscal 2013, involving Rs.58,556 crore. Indeed, some of them could be wilful defaulters but it’s not easy to brand a borrower as a wilful defaulter.

According to the Reserve Bank of India, a wilful defaulter is one who has the ability to pay up but doesn’t pay; who diverts funds; or, who has sold the property that was used as a security to obtain the loan. Since money is fungible, it is extremely difficult to establish that a borrower has indeed diverted bank funds.

After the collapse of US investment bank Lehman Brothers Holdings Inc. that led to an unprecedented credit crisis globally and sharply eroded value of many companies, quite a few Indian corporations went shopping overseas. Some of them may have used bank loans, raised for some other purposes, for such acquisition, but banks cannot establish this easily. With many such acquisitions going sour, corporations are finding it difficult to pay back the money. So, the deteriorating macroeconomic scenario in Asia’s third largest economy alone is not responsible for the rising bad assets of banks; irresponsible corporate strategy to expand has also contributed to it.

A wilful defaulter cannot raise money from the capital market; and all group firms are also barred from accessing bank finance. The lenders can take legal action against such defaulters to recover money. The debt recovery tribunal is a fast-track route to dispose of such cases but the borrower can appeal against a tribunal judgement in a high court. Simply put, it’s not easy for banks to recover money. In fact, rules are always tilted in favour the borrower and not lender, globally. The bankruptcy proceedings in the US have inherent bias towards borrowers; in India, victims of economic downturn recast their loans on the so-called corporate debt restructuring platform.

SBI, which controls about 20% of the total assets of India’s Rs.75 trillion banking system, classified 274 companies as wilful defaulters in fiscal 2013, after pushing 383 into that category in the preceding fiscal, but caught in this net are all small fishes. It will be able to recover part of its Rs.1,600 crore Kingfisher Airlines loan by selling shares in two group companies, two UB Group properties in Mumbai and Goa and two helicopters. It also holds the Kingfisher Airlines brand as collateral in addition to a personal guarantee from Mallya.

Banks have been increasingly asking for personal guarantees from high-profile promoters but it does not guarantee timely repayment of debt.

Besides, who will give the personal guarantee on behalf of a public sector undertaking or a widely-held company? The best way to ensure timely repayment of loans is intelligent appraisal of proposals, a hawk eye on every account and continuous monitoring. Bankers know how some promoters take the system for a ride but don’t know how to bell the cat.

Tamal Bandyopadhyay keeps a close eye on everything banking from his perch as Mint’s deputy managing editor in Mumbai. He is also the author of A Bank for the Buck, a book on HDFC Bank. Email your comments to bankerstrust@livemint.com