For banks struggling with bad loans, the list of rogue borrowers is getting longer despite them filing lawsuits and hauling defaulters to the bankruptcy court. Wilful defaults by over 11,000 borrowers — who, technically, have the financial wherewithal but have not paid back bank loans — have surged by Rs 43,000 crore to Rs 161,213 crore during the 12-month period ended December 2018.
Wilful defaults have soared by Rs 121,700 crore from just Rs 39,504 crore in March 2014, according to figures published by Transunion Cibil, a credit information company. The State Bank of India (SBI) alone accounted for Rs 39,471 crore of wilful defaults as of December 2018.
In March 2014, there were only 5,090 wilful defaulters who defaulted on Rs 39,504 crore. This grew steadily over the years to number 11,046 wilful defaulters and Rs 161,213 crore by December 2018, as per the Cibil list. This figure, which is 15.5 per cent of gross NPAs of Rs 10.39 lakh crore, is set to rise for the quarter ended March 2019 as banks are expected to add more names to the list.
Cumulatively, between March 2014 and December 2018, there was an over four-fold increase in the amount classified under wilful defaults. During the previous five year period — March 2009 to March 2014 — the surge in this amount was nearly four-and-half times. The SBI has classified ABG Shipyard (Rs 1,874 crore), ABC Cotspin (Rs 403.7 crore), Sai Infosystem (Rs 431 crore), GET Engineering (Rs 405 crore), Surya Pharma (Rs 574 crore), Radikal Foods (Rs 492 crore), Shree Ganesh Jewellery (Rs 452 crore) and Rei Agro (Rs 671 crore), among many others.
The LIC has listed Unitech (Rs 429 crore) and Sterling Biotech (Rs 423 crore) as wilful defaulters.
Gupta Coal (Rs 451 crore), Nitin Kasliwal’s S Kumars Nationwide (Rs 834 crore) and Vijay Mallya’s Kingfisher Airlines (Rs 695 crore) are among others in the IDBI Bank’s list. The Punjab National Bank’s wilful defaulters include Mehul Choksi companies Gitanjali (Rs 4,633 crore), Gili India (Rs 1,445 crore), Nakshatra Brands (Rs 1,108 crore). Others in the PNB list are: Jatin Mehta’s Winsome (Rs 899 crore) and Forever Precious (Rs 747 crore), and Zoom Developers (Rs 410 crore).
The Bank of India has Gupta Coal (Rs 715 crore) as a wilful defaulter. Kingfisher also owes Rs 426 crore to Bank of Baroda. Other big names in the wilful defaulters list are: Rank Industries (Rs 908 crore), Raza Textiles (Rs 1,397 crore) and Beta Naphthol (Rs 1,658 crore). “It is a well-known fact that bulk of these bad loans is attributable to the big businesses and the affluent. In many cases of bank loan default, it is found to be deliberate, wilful and on account of diversion of funds. Unfortunately, bank loan default is still a civil offence and, hence, criminal proceedings are not being instituted against them,” said a banking source who tracks the bad loan status in the sector.
The RBI first notified the wilful defaulter dissemination scheme in April 1999 and modified it in May 2002.
AIBEA secretary general C H Venkatachalam said: “We have been demanding publication of the names of these defaulters periodically by the government but to no avail. We have also been demanding criminal action, at least against the wilful defaulters. All these are encouraging big borrowers to take loans and cheat banks. It is obvious that cheating the banks is nothing but cheating the people as banks extend loan from the money deposited by the people.”
According to the RBI’s Master Circular on wilful defaulters, once the bank declares a borrower wilful defaulter, no additional funding facility should be granted by any bank to the listed wilful defaulter. In addition, such companies (including promoters) should be barred from institutional finance from banks for floating new ventures for a period of five years from the date of removal of their name from the list of wilful defaulters as published or disseminated by the RBI or credit information companies. Lenders should initiate criminal proceedings against wilful defaulters, wherever necessary, it states.
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