Look Out for Look Out Notices
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The Bombay High Court has invalidated the authority of chairmen, managing directors, and CEOs of public sector banks to request the issuance of Lookout Circulars (LOCs).
The escape of high-profile defaulters from the country to avoid repercussions and retrieve the money borrowed had led to a surge in LOC requests in recent years.
My Take:
Guarantors of Bank Loans: You Were Warned
Reflecting on the essence of the court's decision, where the power to issue LOCs has been curtailed, it aligns with the stance I took in my blog.
Back in 2011, I emphasized the need for stringent actions against defaulters, urging banks to refrain from offering further advances to defaulting entities. This proactive measure now resonates with the need for legal actions against those fleeing the country to avoid responsibilities.
Wilful Defaulters and Wilful Lenders: A Transparency Call
The recent focus on naming and shaming defaulters who try to evade repayment obligations echoes my sentiments from a 2016 blog post.
I highlighted the transparency practices of housing societies in Mumbai that publicly list members failing to pay dues. Drawing a parallel, banks can learn from this approach and consider disclosing details of loan-takers and their obligations to promote financial accountability.
Call to Action:
To the legal authorities overseeing financial regulations and accountability,
I urge a continued push for transparency and stringent measures to hold defaulters accountable.
Strengthening mechanisms to prevent loan defaulters from absconding and ensuring public disclosure of defaulters' details can help maintain financial integrity.
Let's strive for a system where defaulters face consequences and where the public has access to crucial financial information for a more accountable financial ecosystem.
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With regards,
www.HemenParekh.ai / 01 Nov 2024
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