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The Rediff Business Special/ N Vittal

Tackling frauds in other financial sectors

Part I

Part II

Part III

We may now examine the issue about the other aspect of the financial sector like insurance companies, the Securities and Exchange Board of India and capital markets as well as the financial institutions.

I would suggest that these organisations may first pursue the chapter on the banking sector and if this would meet their requirements, we can simply extend the applicability of the chapter on banking sector to them also.

Alternatively we can think of a dedicated chapter in the Vigilance Manual to these organisations also.

From a macro point of view, another cause of corruption in the financial sector is the system that governs advances to the industry. We find that the industry, which draws funds from the banking system, may become sick but the industrialist does not become sick. He becomes sick only when the CBI raids him.

One of the factors which probably helps unscrupulous industrialists to cheat the banning system is the Sick Industries Companies Act. It is said in the Bible that the path to hell is paved with good intentions. Perhaps the SICA is an example of this Biblical truth.

I have therefore requested the banking secretary to examine whether SICA should be scrapped and the Board for Industrial and Financial Reconstruction abolished so that the one part of our financial sector which institutionalise opportunities for unscrupulous people to exploit the system and indulge in corrupt practices can be eliminated.

It is said that the eternal vigilance is the price of liberty. Perhaps eternal vigilance is also the prize for a corruption free financial sector.

N Vittal, Central Vigilance Commissioner, spoke at the Indian Merchants Chamber, Bombay, recently on corruption in the financial sector.

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