Gitanjali Gems established by now-fugitive businessman Mehul Chowksi has emerged as country’s biggest defaulter. There were Top 50 wilful defaulters in India who owed banks Rs 92,570 crore as of March 2022.
Top 50 defaulters owe Rs 92,570 crore to banks
Quoting data released by Reserve Bank of India, Minister of State for Finance Bhagwat Karad told Lok Sabha on Monday that Gitanjali Gems has defaulted on loans of Rs 7.848 crore. It was followed by Era Infra Engineering (Rs 5,879 crore), Rei Agro (Rs 4,803 crore), Concast Steel and Power (Rs 4,956) , ABG Shipyard (Rs 3,708 crore), Frost International (Rs 3,311 crore), Winsome Diamonds and Jewellery (Rs 2,931 crore), Rotomac Global (Rs 2,893 crore), Coastal Projects (Rs 2311 crore) and Zoom Developers (Rs 2,147 crore).
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Wilful defaulters are those borrowers who have the ability to repay the loan but are unwilling to do so
In order to “deter defaulters, to take effective action against them, and to recover the default amount from them, including recovery from written off loans,” according to Karad, authorities have initiated a slew of measures. The RBI regulations state that these defaulters are not eligible for new loans and are prohibited from starting new businesses for a period of five years. Companies with willful defaulters on their boards are prohibited from accessing the financial markets to raise money. The government has passed legislation that allows it to seize the assets of fugitive economic offenders, such as Nirav Modi, Mehul Choksi, and Vijay Mallya, who leave India to avoid being prosecuted.
Banks have written-off loans of Rs 10.1 trillion in the past five years
In a separate development, the finance minister Nirmala Sitharaman said that banks have written off loans of Rs. 10.1 trillion over the course of the preceding five fiscal years in a written response to a question in the Lok Sabha. According to her, public-sector banks have recovered Rs 4.8 trillion over the past five years, including Rs 1.03 trillion from loans that were written off.
When all attempts to collect money from defaulters fail or there is no more room for recovery, banks often write off loans to clear their books by making full provisions for them. However, defaulters are still responsible for repayment and are not excused from it.
State Bank of India (SBI), the largest lender among state-run banks, wrote off Rs 2 trillion in the last five years. SBI was followed by Punjab National Bank (PNB), which wrote off Rs 67,214 crore, and IDBI Bank, which wrote off Rs 45,650 crore, according to Karad in a written response, citing RBI data. Banks have used write-offs to lower the amount of non-performing assets (NPA) that are recorded in their books. In March 2022, banks’ gross non-performing assets (NPA) ratio fell to a six-year low of 5.9%, while their net NPA ratio decreased to 1.7%.
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