Industry needs to get in habit of doing ethical business: Jaitley

Finance Minister Arun Jaitley on Saturday warned borrowers of dire consequences if they did not return money to the banks and asked industry to get into the "habit of doing ethical business" after India's biggest banking fraud in Punjab National Bank shook the country a fortnight ago.

Jaitley also took a fresh dig at regulators saying they should not look the other way while a fraud is taking place. Instead suggested the  regulators to keep  a "third eye" open to detect any irregularity.

"The old concept that the money that has been borrowed may or may not be returned has to end now. The law would be tightened to ensure criminal acts in business punished wherever the culprit is," he said at a media event here, adding ease of doing business is not the government's responsibility alone.

"I think we should now stop repeating the phrase 'ease of doing business and move to the industry responsibility of habit of doing ethical business," Jaitley said asking a section of businesses to introspect that cases of wilful defaults and bank frauds were killing ease of doing business efforts.

"If a fraud is taking place in various branches of the banking system and not one employee raised a red flag, auditors looked the other way or did a casual job and the management remained unaware, it is worrisome for the country," Jaitley said.

"Unfortunately, in the Indian system, we politicians are accountable, but regulators are not," he said.

Taking the discussion forward on simultaneous elections as suggested by Prime Minister Narendra Modi in the same forum on Friday, Jaitley said from both governance and expenditure point of view to have two-three elections every year is a serious challenge.

"At least if elections are held every five years, India will see comfortable governance and policy formulation besides lesser expenditure," he said.

Amid growing clamour about privatisation of state-owned banks after the PNB scam, Jaitley said the move may not find political consensus.

"This involves a large political consensus. Also, it involves an amendment to the law (Banking Regulation Act). My impression is that Indian political opinion may not find favour with this idea itself. It's a very challenging decision," he said.

Industry bodies Ficci and Assocham have raised voices for privatisation of state-owned lenders in a phased manner.

On whether decisions made by the judiciary have also impacted ease of doing business, Jaitley said legal experts must use this as a research subject and find out what is the negative impact on India's GDP at the end of the year and how many jobs were lost on account of some such judgements.