PEP norms in focus as MPs say kin denied loans

THE LAWMAKERS THE ISSUE BELIEVE IS WITH THE PEP NORMS OF THE FINANCIAL ACTION TASK FORCE

- Saubhadra Chatterji

Some parliamentarians have expressed concern about banks and other financial institutions denying loans to their relatives, prompting the standing committee of finance to take up the issue.

While some of those affected have cited international norms on Politically Exposed Persons or PEPs that have been adopted by the Reserve Bank of India (RBI) as the reason for this, people in the banking business say that banks and financial institutions may be denying loans to such people purely out of the fear that they may use their political influence to avoid repaying the money.

BJD MP Amar Patnaik, a member of the Parliament's finance standing committee, said "a number of MPs flagged difficulties in accessing bank credit for their family members when they try to buy a house or a car. It is a serious problem."

Last year, BJP MP GVL Narsimha Rao said that banks often deny credit to political leaders and their family members. Minister of state for finance Bhagwat Kishanrao Karad added that even police personnel face similar problems.