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Do the Banks abide by the RBI Guidelines at all times?

The Reserve Bank of India is prime banking institution of the country entrusted with a
supervisory role over banking and conferred with the authority of issuing binding directions,
having statutory force, in the interest of public in general, and preventing banking affairs from
deterioration and prejudice as also to secure the proper management of any banking company
generally. Reserve Bank of India is one of the watchdogs of finance and economy of the nation.
It is, and it ought to be, aware of all relevant factors, including credit conditions as prevailing,
which would invite its policy decisions. RBI has been issuing directions/circulars from time to
time which, inter alia, deal with rate of interest which can be charged, facilities to Small and
Medium Industry, Nursing, Revival, and Rehabilitation of viable sick SSI and SME, Asset
Classifications etc,. Its circulars shall bind those who fall within the net of such directives.
Reserve Bank of India, the regulatory authority over the Banking and Financing activities
throughout the country, at number of times, issued directions to the bank, stressing upon the
methodology to be adopted in the cases of the Industrial finances, and also directed to keep a
close monitoring of the Industrial unit, with respect to the activities, with an object to support the
Industry in the times of need, in order to sustain the Industry from being sick and closure thereof,
as the Government of India and the RBI, have found that, the growth of National economy is
possible only through growth of the Small Scale Industries, which contribute a lot to resolve the
problems of local employment, as well as cater to the public exchequer by paying various rates
and taxes.
It is a matter of fact, that, every business has certain risk factor, and crisis comes in a life time of
any business. For overcoming the situation, the RBI has fixed certain parameters which ought to
have been followed by the bankers, but, in the present scenario, the bankers are not bothering to
support the Industry/Project in the hard times, and instead of providing the need based additional
credit in the need of hour, are preferring to the approach of killing the Industrial ventures, and
putting the promoters thereof on road, since they also take the residential premises in collateral
security, and auction them at throw-away prices. All this they are doing in total disregard of the
statutory duty cast upon them in the capacity as public officer.
The RBI Guidelines are usually thrown to the dust-bin and no banker follows the notifications
and directions of the Apex Bank while dealing with the Industrial customer or his account.
Finally the Industrial Borrowing is also treated at par with the other categories of advances like
consumer and personal loans, advances classified as capital exposures, advances classified as
commercial real estate exposures; which are illegal and a total violation of the Guidelines
provided by the RBI. The Banks sit pretty as no one questions these irregularities and violations.
The other pitiable situation is that the Advocates practicing before the Debt Recovery Tribunals
make the least effort in indulging and understanding the RBI Guidelines and Circulars.

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