Prime Minister Narendra Modi has come across an appeal from business leaders in Calcutta, too, to draw a distinction between business failure and financial fraud.

Modi, who arrived in the city on Saturday afternoon, squeezed in two meetings with business figures where the refrain was that the government needed to stop demonising investors for their failure to pay back debts when business bets went wrong.

Bankers have been loath to lend to businesses that have racked up unpaid debts, fearing that any show of accommodation might invite intense scrutiny and harassment at the hands of federal investigative agencies if the bad loans piled up.

Businesspersons belonging to the Indian Chamber of Commerce and the Merchants’ Chamber of Commerce met Modi in separate batches at the Raj Bhavan on Saturday. They urged the government to stop vilifying businessmen for genuine business failures.

At least one member of the Merchants’ Chamber of Commerce delegation, which was led by Vivek Gupta, who also happens to be a Trinamul Congress MP in the Rajya Sabha, said the Prime Minister had agreed that there ought to be a distinction between fraud and failure.

“The PM said he’s working with the Reserve Bank of India and others to ensure that business losses were not penalised,” Gupta said.

The eight-member delegation of the Indian Chamber of Commerce was led by its president, Mayank Jalan, and included Sanjiv Puri, ITC chairman; Sanjiv Goenka, RP-SG Group chairman; Harsh Neotia, chairman of the Ambuja Neotia group; Hari Mohan Bangur, managing director of Shree Cement; Krishna Kumar Bangur, chairman of Graphite India; Sidhant Kaul of Nicco Engineering Services; and Vikash Agarwal, president of Rupa & Co.

The Merchants’ Chamber of Commerce team had 12 members, including Sunil Kanoria, vice-chairman of Srei Infrastructure Finance Ltd; and Hemant Bangur, executive chairman of Gloster Jute.

The two chambers also raised specific issues relating to eastern India and the Northeast.

Last month, Union finance minister Nirmala Sitharaman had met the chiefs of public-sector banks and tried to soothe their fears of repercussions, including vigilance enquiries, if loans turned bad.

Bankers were assured at the meeting that they would be protected if they had acted in good faith and observed all the practices of prudential commercial decision-making while extending credit.

This was the first time that the CBI director attended any discussion between the finance ministry and bankers.

The banking sector has been working hard to clear the sludge of toxic debt from its choked channels of lending through a bankruptcy resolution process.

It has found some success with the gross non-performing assets (NPAs) -– banking parlance for bad loans – declining to 9.1 per cent in the year ended March 2019 from 11.2 per cent in the previous year. The Reserve Bank said in its financial stability report, published last month, that it was the first decline in gross NPAs in seven years.

Bankers do not want to botch up that success and invite trouble through another bout of reckless lending. But it is increasingly apparent that the economy, projected to grow at 5 per cent this fiscal -– the slowest since the 3.1 per cent in 2008-09 -– cannot come out of the trough unless there is a surge in private investments.