Wilful defaulters across all 17 nationalised banks shot up a staggering 60 per cent to 8,582 in the past five years, according to the latest available official data. Given improving banking practices however, lenders managed to recover Rs 7,654 crore from wilful defaulters’ accounts between FY15 and FY19.
Five years ago, the number of willful defaulters stood at 5,349, said Union Finance Minister Nirmala Sitharaman in a written reply to the Lok Sabha. A wilful defaulter is an entity or a person defaulting payments despite the ability to do so.
“Wilful defaulters are acted against comprehensively. Moreover... as per RBI’s instructions, wilful defaulters are not sanctioned any additional facilities by banks or financial institutions, and their unit is debarred from floating new ventures for five years,” Sitharaman said.
As per the disclosed data, suits for recovery have been filed against 8,121 cases as on March, 2019, while in cases involving secured assets, action under the provisions of SARFAESI Act has been initiated against 6,251 cases.
“Further, in accordance with RBI instructions of initiation of criminal proceedings wherever necessary, FIRs have been registered in 2,915 cases,” Sitharaman said.
In the past few years, the government undertook several measures to tighten the leash on errant borrowers. These range from classifying them as wilful defaulters to publicly naming and shaming them. Following the government’s backing, PSBs are becoming bolder.
A case point was the public naming of Yash Birla, a flamboyant industrialist, who was not only declared a wilful defaulter by UCO Bank, but the bank also made the news public by putting out a newspaper advertisement.
Meanwhile, for effective action against such borrowers fleeing Indian jurisdiction to avoid scrutiny, the Fugitive Economic Offenders Act, 2018 has been enacted to provide for attachment and confiscation of property of fugitive offenders and has disentitled them from defending any civil claim.
These Acts are now facilitating the confiscation of properties belonging to current high-profile cases involving liquor baron Vijaya Mallya and diamond merchants Mehul Choksi and Nirav Modi.
Besides, vide Sebi regulations, wilful defaulters and companies with wilful defaulters as promoters or directors have been debarred from accessing capital markets to raise funds, while the Insolvency and Bankruptcy Code, 2016 has debarred them from participating in the insolvency resolution process.