Millennium Post

Finmin seeks list of wilful bank loan defaulters by month-end

“We have asked banks to provide list of wilful defaulters which is expected in the last week of this month,” Secretary Department of Financial Services Hasmukh Adhia said. RBI has come down heavily on wilful defaulters, he said, adding that the consolidated data will give an idea about what actions have been taken by banks in this regard and what more was needed to be done to check this menace.

In order to check such incidences, RBI is in the process of redefining the term “wilful defaulters” to bring directors of defaulting companies under its ambit. “The (Calcutta High) Court had some questions about whether all directors could be declared wilful defaulters and we have looked at that,” RBI Governor Raghuram Rajan had said.

“We are in the process of modifying the definition so that the directors, if seen, as culpable in actively participating or being grossly negligent of wilful default (are dealt with),” he had said. According to the current definition, a wilful defaulter is somebody who has essentially not used the fund for the purpose it has been borrowed or when he has not repaid when he can do so; when he has siphoned off the funds or when he disposed of the assets pledged for availing of loan without the bank’s knowledge.

As per the present norms, whole-time directors or executive directors of a company indulging in wilful default are liable for legal action including criminal proceedings as per the law. Cases of wilful default among other reasons have pushed Gross non-performing assets (NPAs) of the PSU banks over Rs 2.5 lakh crore as on December, 2014.

The top-30 defaulters are sitting on bad loans of Rs 95,122 crore, which is more than one-third of the gross NPAs of PSU banks at Rs 2,60,531 crore as on December 2014. Gross NPAs of public sector banks rose sharply to 5.33 per cent in September 2014 as compared to 4.72 per cent of total advances at the end of March 2014. To check the rising number of wilful defaults both the government and the RBI has asked banks to take strict action against wilful loan defaulters. If warranted they can initiate criminal proceedings including filing of FIR. There has been an increase in incidence of suits filed against defaulters and cases of wilful defaults. 

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