March 13, 2019
The Central Vigilance Commission of the Indian Government (CVC) recently advised public sector banks in India to discontinue the practice of sanctioning advances and credit facilities on the basis of a brand name. The CVC has advised banks that brands don’t form any tangible security for the purpose of recovery. The public lending sector in India has experienced fiascos with inflated brand valuations of Kingfisher Airlines and Gitanjali Gems carried out ten years ago. Now that CVC has put its stamp of disapproval, it is expected that corporate India can bid goodbye to getting credit facilities for their brands from public sector banks.
The brand valuation profession should have learned its lessons, too.