Government empowers PSU banks to seek lookout circulars against wilful defaulters

The Home Ministry has also authorised the Serious Fraud Investigation Office (SFIO), a statutory corporate fraud investigation agency, to request LOCs if it feels the suspect may escape from India.

Published: 27th January 2019 08:20 PM  |   Last Updated: 28th January 2019 07:55 AM   |  A+A-

Nirav Modi took huge amount of money just on the basis of Letters of Undertaking from PNB bank. (File Photo)

The ministry has authorised chairman-cum-managing directors or chief executive officers of public sector banks and the SFIO to request designated authorities to issue LOCs against any wilful defaulter or fraudster if they think the person may flee the country.

By Express News Service

NEW DELHI: The government has now empowered PSU banks to seek lookout circulars against willful economic offenders in a bid to prevent big economic offenders like Vijay Mallya and Nirav Modi from fleeing the country.

The government’s fresh move comes after three high-profile escapes involving liquor baron Vijay Mallya and diamantaires Nirav Modi and Mehul Choksi rocked the country, inviting embarrassment for the government.

The government had last year brought the Fugitive Economic Offenders Act, empowering the authorities to attach and confiscate the proceeds of crime and properties of economic offenders, like bank fraudsters or loan defaulters who fled the country. By the new circular, the Home Ministry has also authorised the Serious Fraud Investigation Office (SFIO), to request LOCs, if it feels the suspect may escape from India. An LOC is valid for a year unless its duration is specified.

The ministry has issued two circulars, authorising chairman-cum-managing directors or chief executive officers of public sector banks and the SFIO to request designated authorities to issue LOCs against any willful defaulter or fraudster if they think the person may flee the country.

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