NEW DELHI: Flagging how banks are reluctant to give loans to politicians including MPs as they fall under the category of “politically exposed people”, BJP MP G V L Narsimha Rao on Tuesday urged the finance ministry to remove this stigma, which is also an “insult”.
Union finance minister Nirmala Sitharaman said there is no such stated policy or guideline not to give loans by banks to politicians and policemen.
Raising the issue during the Question Hour, Rao said the banks put all those in the political field as politically exposed persons (PEPs) and it not only includes elected representatives, but even those who hold office bearers’ positions.
He said many MPs in the House who are otherwise eligible to get loans and people whom banks chase to offer loans including former senior IAS officers or businessmen don’t get loans as they are PEPs.
“It’s an insult…I want to understand why there is such a category and whether RBI can issue any guidelines to remove the stigma,” he said.
Responding to the question, MoS (finance), Bhagwat K Karad said when banks give loans to politicians and policemen they look at their track record and it’s a fact that the banks are hesitant to give loans.
When Deputy Chairman Harivansh Narayan Singh observed that the members were seeking a solution to the issue, Sitharaman said, “I don’t think there is an official stated policy that we should not give them loans.”
She added the banks make their own assessment based on KYC and any other official ratings such as Cibil rating. “So, I don’t think there is any specific instruction to the banks not to give loans to any person,” she added.
Union finance minister Nirmala Sitharaman said there is no such stated policy or guideline not to give loans by banks to politicians and policemen.
Raising the issue during the Question Hour, Rao said the banks put all those in the political field as politically exposed persons (PEPs) and it not only includes elected representatives, but even those who hold office bearers’ positions.
He said many MPs in the House who are otherwise eligible to get loans and people whom banks chase to offer loans including former senior IAS officers or businessmen don’t get loans as they are PEPs.
“It’s an insult…I want to understand why there is such a category and whether RBI can issue any guidelines to remove the stigma,” he said.
Responding to the question, MoS (finance), Bhagwat K Karad said when banks give loans to politicians and policemen they look at their track record and it’s a fact that the banks are hesitant to give loans.
When Deputy Chairman Harivansh Narayan Singh observed that the members were seeking a solution to the issue, Sitharaman said, “I don’t think there is an official stated policy that we should not give them loans.”
She added the banks make their own assessment based on KYC and any other official ratings such as Cibil rating. “So, I don’t think there is any specific instruction to the banks not to give loans to any person,” she added.
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