A wilful defaulter is an entity or a person that has not paid the loan back to a public sector bank despite the ability to repay it. (Photographer: Sondeep Shankar/Bloomberg News)

Number Of Wilful Defaulters In Public Sector Banks Rose Over 60% In Five Years

The number of wilful defaulters in public sector banks has increased by more than 60 percent to 8,582 in the five years to March 2019, the government said on Monday.

At the end of 2014-15 fiscal, the figure stood at 5,349, finance minister Nirmala Sitharaman said in a written reply to the Lok Sabha. She was replying to a question whether the cases of wilful defaulters of banks have increased during the last five years.

A wilful defaulter is an entity or a person that has not paid the loan back to a public sector bank despite the ability to repay it. The number of such borrowers increased to 6,575 in 2015-16, 7,079 in 2016-17 and 7,535 in 2017-18.

“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 in the Lok Sabha. Over Rs 7,600 crore has been recovered from wilful defaulters in the last five fiscals, she said.

According to data from public sector banks, till March 31, 2019, suits for recovery have been filed in 8,121 wilful default cases. In cases involving secured assets, action under the provisions of Sarfaesi Act has been initiated in 6,251 cases.

There are 17 public sector banks in India.

Also read: How A Birla Scion Ended Up Being Shut Out Of India’s Banking System

“Further, in accordance with RBI instructions of initiation of criminal proceedings wherever necessary, FIRs have been registered in 2,915 cases,” Sitharaman said.

Besides, as per the market regulator’s regulations, wilful defaulters and companies with wilful defaulters as promoters/directors have been debarred from accessing capital markets to raise funds, she said.

In addition, the Insolvency and Bankruptcy Code, 2016, has debarred wilful defaulters from participating in the insolvency resolution process.

For effective action against wilful defaulters fleeing Indian jurisdiction, the Fugitive Economic Offenders Act, 2018, has been enacted to provide for attachment and confiscation of property of fugitive offenders. The law also disentitles them from defending any civil claim.

The government has also advised public sector banks to decide on publishing photographs of wilful defaulters as well as obtain certified copy of the passport of promoters/directors and other authorised signatories of companies availing loans of more than Rs 50 crore, Sitharaman said.

Heads of public sector banks have also been empowered to request for issuance of look out circulars against wilful defaulters, she said.

Also read: Slippages Nearly Halved For Public Sector Banks In FY19

Bloomberg Quint

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