Bank harassment driving SSI units to sickness

Infinity Metals, an export-oriented SSI unit, has been struggling to keep itself afloat after its bank systematically abused the SARFAESI Act and harassed it into near-bankruptcy. Denied justice by the ombudsman, the troubled unit is now left gasping for breath

At a time when small-scale industries (SSIs) are being given ‘priority treatment’, many units continue to be left at the mercy of callous and grasping banks. One such unit, Infinite Metals, is being systematically dismantled by its banker under the umbrella of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, and despite its desperate cries for help, regulators and authorities continue to turn a blind eye. The Act empowers banks and financial institutions to recover their non-performing assets (NPAs) without the intervention of the Court, through various methods.

The case of Infinite Metals shows how SARFAESI’s draconian powers are misused by banks against small companies. Infinite Metals is a small-scale export-oriented unit (EOU) which is facing a daily battle for survival as its lender, Corporation Bank, is unfairly utilising the provisions of the SARFAESI Act to force the otherwise healthy unit into sickness.

The Bank has been resorting to various strategies to recover its claimed dues. The unit alleges that Corporation Bank wrongfully classified its account as an NPA, when there were no overdue amounts. Its accounts were immediately frozen following this classification, which prevented the unit from access to working capital. It states that in order to justify the NPA classification, the Bank has been cooking up the amounts and due dates in various submissions to the Reserve Bank of India (RBI) and the Banking Ombudsman (BO). The Bank apparently also failed to give due notice of the account becoming an NPA before enforcing the SARFAESI Act on the borrower. The Bank also blatantly refused to make any efforts towards restructuring the unit’s debt and helping it get back on its feet.   

Following such harassment, Infinite Metals filed a complaint with the BO to get justice and protection. The BO, after a detailed investigation and written and oral submission from both parties, finally concluded that there was indeed a deficiency in service on the part of the Bank on all points mentioned in the complaint.
However, a year later, the BO unceremoniously closed the case on the grounds of lack of adequate documentary evidence and failed to issue a decisive order.

Emboldened by this move, Corporation Bank promptly stepped up its harassment and threatened to sell the unit’s residential property under the SARFAESI Act.

The Bank finally succeeded in arm-twisting the unit into selling its property, for which the unit had to pay a capital gains tax. It has also lodged a recovery suit at the debt recovery tribunal (DRT). This is despite the fact that the unit has paid the Bank 100% of its principal dues. Corporation Bank is now choking the unit into paying up the inflated principal and outstanding interest. {break}

Harish Bhatia, director of Infinite Metals, points out how the Bank has refused to follow RBI guidelines. “Corporation Bank has wrongfully invoked the SARFAESI Act within three months of NPA classification. It has not followed any RBI guidelines in this matter. Despite accepting the fact that no dues were outstanding, the Bank has gone ahead and invoked SARFAESI. Also, when the credit facilities were guaranteed by Export Credit Guarantee Corporation of India Ltd (ECGC), what was the legal reason for the Bank to come on us so hard? The BO’s decision to drop our case is simply baffling. In my belief, it is a clear case of corruption and malafide intention on the part of the Bank.”

When contacted by Moneylife, an official from Corporation Bank claimed that the Bank has followed RBI’s guidelines on the SARFAESI Act and that it is yet to receive 100% of its dues. “Bank classification of NPA is nothing to do with the ECGC’s claims. They have their own way of settling things. It could have taken a long time for them to actually conclude investigations and settle the claim.”
When asked why the Bank did not attempt to restructure the unit’s debt, the official said, “The company should have initiated a definite proposal for restructuring if it so wished.”

The BO’s failure in providing justice to the unit has now left it at the mercy of the lender. Continued harassment at the hands of the Bank will only drive the unit further into financial losses, ultimately leading to its closure. The unit’s appeal to the RBI against the BO’s decision has been referred back to Corporation Bank. However, no reply has been forthcoming from the Bank and hence, the appeal is held up. In this scenario, the SSI unit now appears to have nowhere to turn to. It certainly cannot expect to get justice from the civil courts, where various cases have been pending for ages.

Ironically, an RBI survey itself points out that only 4% of sick SSI units are viable. “Has anyone tried to check how many of these sick units are a case of bank-induced sickness? Are 96% of our SSI brethren such dumb entrepreneurs,” asks Harish Bhatia.  

The fact is that many such small businesses are being subjected to torture and harassment at the hands of bankers with selfish interests. While it is very easy for bigger companies to have their way with the banks and the judiciary, small businesses with no clout always end up on the losing side.



dhaniram gupta

6 years ago

dear sir
my naame is dhani ram gupta maine 6 month se 3 time sbi me tm ke liye apply kar chuka hu par banks wale sunte nahi hai mine ek mail dgm and sbi customer cre me ki phir bhi koi feed baack nhi mila


Harish Bhatia

In Reply to dhaniram gupta 6 years ago

Dear Guptaji,

Aapne kis type ke loan ke liya apply kiya hai??
AAp koun se sheher se ho. AAP apne ilake ke Banking Ombudsman ko complaint kar sakte ho.


6 years ago

Yes the act is SARFAESI draconian in terms of borrower rights.

Imp: Like indeed 1000 SSI units shall first start Signature action to Finance Ministry, President and MSME ministry as step 1

Secondly file SLP in supreme court by at least 25 like minded and sufferers.

• Bank will entered in to a business deal by lending money for the purpose business. It is unfortunate that FIs are blessed with the kind of powers to go beyond business under this act.
• The kind of actions FIs take under this act in most of the cases effect the future, and peaceful life of the borrower after from social damage.

• The banks abuse the SARFAESI act to arm twists the borrowers to extract extra funds, charge extra interest and some times bribes. The act itself is one sided and gives immense powers to lending FIs curtailing the basic rights of borrowers.

• In case of cases of SSI units the whole asset either capital, liquid , real estate will be locked by the bank or the customer at any point of time. Banks applying SARFACEI locking up every opportunity and arm-twisting the SSI borrower to pay other wise auction all the assets is nothing but barbaric.

• Even when the dues to FIs are fractional amount of the assets pledged/ mortgaged FIs will conveniently auction the total assets in association with land mafia and Scrap dealers and sell the assets at much lower prices and also adjust the sale receipts towards inflated dues and interest leaving the borrowers on road.


Harish Bhatia

In Reply to srinivas 6 years ago

Hi Srinivas

Let us start a signature action for Finance Ministry and also action for filing SLP in Supreme Court. Ours is live case on misuse of sarfaesi act. We are an SSI-EOU manufacturing unit. Its a case of bank induced NPA even though there were never any dues or overdues.

Our account was never classisifed as NPA, Sarfaesi was invoked, home auctioned, 100% principal dues paid, entire advances were guaranteed by ECGC, refused upgradation of accounts to standard even after payment of all dues, etc etc.

The Bank officials have butt kicked all RBI guidlines on asset classification, SSI rehab., Codes on Lenders liability, SME, Fair practises, Sarfaesi act., etc.

The bank does not want release securities by inflating Interest rates and charging interest even after payments have ben received.

Bank filed recovery suit at DRT even after 100% payment is made. We are dragged into litigation for probably 10 years.

We are paying the price for honesty. RBI refuses to intervene and is actively sheilding the bank inspite of detailed investigation and documentary evidence.

We are as good as street beggars. Over 50 employees and their family are sufferers. 3 of our suppliers are NPA with their banks because we could not pay them.


In Reply to Harish Bhatia 6 years ago

Please take little pain to publish through the local SSI association (Monthly Magazine)

I will try to get the same to be published in few more associations.

We need at least 25 cases to start a moment

Harish Bhatia

In Reply to srinivas 6 years ago

Dear Srinivas,

I give below my contact details. Please send me your so that we could communicate and coordinate the action faster and in a organised manner.

Harish Bhatia
C 83 Sita Sadan, Skybuild Village
Behind: Bhatia School, Opp: Dev Nagar
Kandivali West, Mumbai 400067, India
Tel: +91 98208 03444
E-Mail: [email protected]


6 years ago

From: Dr. A. R. Kamboj,( proprietor),
Linear Pack, 208/5, G.I.D.C.,
Godhra. Dist Panch Mahal, Gujarat.

Mobile : 094298 46425

Dear Sir,

My unit was funded under self employment technical entrepreneur equity fund scheme , to the tune of 96% project cost, under credit Guarantee scheme, in the year 1986.The unit could not took off due lack of need based working capital fund, bank took court action @ unit in Jan.1990 unilaterally. After 20 years out of which bank took almost 11 years to produce certain specific documents asked by us for our defence. But local civil court ignored the fact of breech on the part of SBI, and passed decree in favour of State Bank of India

My unit is a documentary evidence of

a) Incipient sickness as need based working capital was not provided by bank,

b) Even though my unit was funded under equity fund scheme, banker asked me to provide equity funds from friends and relatives, instead of taking my required equity from national equity fund under RBI policy.

c) Even though my unit was funded under Credit Guarantee Scheme, without any collateral security, the bank asked for collateral security to enhance my working capital needs.

My unit is classical documentary evidence about the harassment not only by landing bank but the whole system that does not work impartially, honestly for a comman man like me.

I am a researcher technocrat having lot many innovations to my credit along with a Indian patent about a blown film extrusion process which is first time invented in the world.

Can you please study my unit in details b'coz my unit has find out the reasons scientifically documented to show that why in spite of the known fact that a bank does not provide a adequate & timely fund to SSI, as to why bank then does not provide these funds.

I want to share my experience to show that on this very reason every one has remained silent so far, and my question is why?

So please analyse my whole case openly honestly and let us team together to open the closed eyes and ears of policy makers and implementers.

Would you require any further evidence &/ document please just ask me.

With kind regards



7 years ago

If RBI and Banking Ombudsman are listening - I would like to highlight a Supreme Court judgement in case of Canara Bank vs P.R.N.Upadhyaya wherein it states "Banking - Ombudsman is obliged to comply with directions/circulars and notifications issued by RBI - While dealing with complaints he cannot ignore circulars and directions issued by RBI."

This way BO has to pass a decisive order and cannot close the case unceremonously.


7 years ago

The root of the whole problem is RBI and Banking Ombudsman. It is well known fact that RBI would always protect the banks and Banking Ombudsman under supervision of RBI would also always prefer not to give any verdict against a bank with exceptions of small petty matters.

Due to this attitude, it breeds corruption and high handed approach by babus mainly at Nationalised banks who religiously terrorise small individual and SSI borrowers who are always a soft target. These borrowers always bend to their whims and fancies because they have no legal remedy. Banking Ombudsman has chosen to remain impotent and toothless and civil courts like DRT work for banks, consumer courts, high courts etc have a very long back log. Further, as our fore- fathers have advised - always avoid people with Black and White coats because they make your life more miserable.

Till RBI seriously wakes-up and also makes the Banking Ombudsman scheme Potent and Robust small borrowers shall remain in the clutches of the corrupt bank officials.

It will be interesting to watch what verdict is given in the appeal against BO order made by this SSI borrower. I am sure the appellant authority will find someway (technically) not to pass any order favouring the borrower or for that matter against the Bank even if all glaring deficiencies in service are proved with documentary evidence.

Union Cabinet approves major education reform Bills

According to the Bill on Prohibition of Unfair Practices, charging of capitation fee or failure of educational institutions to keep promises of quality education could attract imprisonment up to three years for guilty administrators or a fine up to Rs50 lakh for the institute

Duping students by charging capitation fee or failing to keep up to the promise of quality education could now attract a fine of up to Rs50 lakh for errant institutes or imprisonment up to three years for its administrators, according a Bill cleared by the Union Cabinet on Friday, reports PTI.

Paving the way for stricter penal action against educational institutions indulging in unfair practices, the Cabinet approved the draft Prohibition of Unfair Practices in Technical, Medical Educational Institutions and Universities Bill, 2010.

The Cabinet also cleared two other education reform Bills—one for setting up of Educational Tribunals to adjudicate disputes in campuses and another for setting up a National Accreditation Agency to give accreditation and benchmarks to institutions. These Bills will now be tabled in Parliament, information and broadcasting minister Ambika Soni told reporters in New Delhi.

According to the Bill on Prohibition of Unfair Practices, charging of capitation fee or failure of educational institutions to keep promises of quality education could attract imprisonment up to three years for guilty administrators or fine up to Rs50 lakh for the institute.

The Bill seeks to consider such practices as criminal or civil offences depending on the nature of the crime.

According to the Bill, if an institute makes certain promises in its prospectus, but does not deliver or charges capitation fee from a number of students, then such practices should be considered criminal offences.

However, in case of an isolated instance of malpractice involving just one or two students, the offences could be considered civil offences. In such cases, the institutes could be slapped with fines.

The criminal offences will be tried in a court of law while civil offences will be tried in educational tribunals to be set up soon.

The Educational Tribunal Bill will provide for setting up of tribunals to settle all types of disputes, including any type of malpractice or harassment of students.

The third Bill is on setting up of an accreditation agency which will assess and accredit institutions of higher education to ensure high standards. The proposed National Accreditation Authority will evaluate the quality of institutes.


Aditya Birla Group: All sound, no substance

This corporate campaign has lots of special effects, surreal visuals and exotic locales—but it’s not going anywhere

The desi conglomerate Aditya Birla Group has released a brand new corporate campaign themed 'Let's reach for the sun'. The mysterious, esoteric commercial is a collage of people from different countries. Why different nations when the group is totally Indian? No idea. Perhaps they are trying to indicate global presence.

Anyway, the commercial, from whatever little I could comprehend (it’s much too noisy and gimmicky for my taste), features music as a metaphor that con-joins people. And the shots are of people playing on various instruments in forests, jumping over mountains and skies, and one dude even sports a full-back tattoo (just in case you think Aditya Birla isn’t hep).  
I don’t know what goes on inside the clients’ minds when they sanction and pay for this stuff. The group has released such commercials in the past as well. The last one had ‘Vande Mataram’ being hummed in the background. Wonder why they went away from it. Perhaps all the controversies over the song may have had something to do with it. Be that as it may, here’s my problem with corporate advertising of this kind: it’s a colossal waste of money. The Aditya Birla Group commercials are notorious for being bloody expensive, they hire international directors and musicians, shoot in exotic locales and the post production gets done in even more exotic studios. Commercials like these tell us zilch about the company. They are self-indulgent blind spots, commercials that float by like David Ogilvy’s famous ships in the dark. A lot of computer effects and noises, and not much else. To put it simply, the Aditya Birla Group’s advert is akin to ‘Avatar’ minus any story. I read somewhere the client imagines that such commercials impart a distinctive personality to the group. But what good is that if at the end of all those crores down, I know as little of the group as I did thirty seconds earlier?
And to take care of that problem, they have committed one of the biggest sins of advertising: shove in flying supers (messages) across the already busy screen, that boast of the number of employees, number of nations the group has presence in and more such numbers. Totally ignoring the fact that with such fast effects and visual drama, it’s impossible for any normal eye to read all that data. In fact, I noticed the numbers after the fifth exposure, and that too as an ad critic, where it’s my job to watch ads pretty closely. Think of the already disinterested viewers who do many other things in life while watching TV ads!
Bottom-line: I just don’t understand why these large groups can’t simply and charmingly tell us what they do. Why blind us with technology and deafen us with sound, when the end result is a one-way communication? Guess we’ll never know the answer.




7 years ago

Despite that this article is trying to dispute the fact of the commercial is extra ordinary, I like the commercial very much!


7 years ago

I'm actually a student of marketing, and would like to hear Mr. Anil's comments on my understanding of the concept of corporate branding.


7 years ago

I fully agree with all that Mr Anil Thakraney has to say about these advertsiements being issued by the Aditya Birla Group. Only an insder at the ad agency or at ABG can undersatnd and appreciate what the Ad wants to communciate. For us lesser mortals, it is a feeling of huge moeny down the drain and a waste of 45-60 seconds each time we view the ad........besides reading and writing about such wasteful efforts and "non-sense" ads!! I bet Mr Kumaramangalam Birla must not be watching TV or else he also may have protested.

Prakash R. Mirpuri

7 years ago

Yes I am in agreement with Anil Thakrarney


7 years ago

i don't agree with the author's comments completely. the motive of that advertisement is NOT informing the viewers about the various businesses of Aditya Birla Group.

the ad is focused on building the brand equity of ABG.

here's an illustration to prove my point: take 2 persons, A & B. A has seen the expensive ad, while B has not.

now, ABG enters a new industry and launches a brand for the same. the ad for that product features the standard "Aditya Birla Group" for 2 seconds at the end of the TVC

Now other things remaining the same, the person A will definitely have a more positive attitude towards that new product vis a vis the person B.

it is similar to Tata displaying "A Tata Enterprise" after every TVC. Tata already has a huge brand equity given its breadth and scale of operations. However, relatively lesser known groups like ABG need to build brand equity through dedicated campaigns.

shirish vora

7 years ago

it is best adds

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