Rising Wilful Defaulters

Loan

Here is a list of Wilful defaulters of few top Banks as on 31.3.2018.

SNo Name of Bank As on Dec 2018 Remarks (Amount in crores)
1. IDBI Bank 7381 13% of Gross NPA
2. Bank of India 9785 60% y-o-y jump
3. Bank of Maharashtra 1385 41% y-o-y jump
4. State Bank of India 37,250 (Sept 2018) Latest not availalbe

 

The above list shows details of increased wilful defaulters among PSU Banks, with IDBI Bank topping the list.  CIBIL data reveals that lenders though have used the IBC (Insolvency and Bankruptcy Code) to recover bad loans, borrowers have shown no interest in repaying their dues which has become cause for concern.

  1. RBI had advised the Lenders in 2017 to refer more than three dozen defaulting companies to National Company Law Tribunal.
  2. The data of IBBI (Insolvency and Bankruptcy Board of India) reveals that 1,484 cases have been acknowledged by the Bankruptcy court during the period Jan 2017 to Dec 2018.
  3. These include referrals by Financial Creditors and Operational Creditors, barring the defaulting companies themselves.

Bankers’ Comments:

  • Lenders recognize several large defaults over the last year
  • After the Finance Ministry advised bankers to probe all bad loans which are above Rs. 50 crore forensic audit was conducted for all such accounts.
  • Those which showed traces of fraudulent activities have been categorized as Wilful Defaulters.
  • Among the Private Sector Banks, Kotak Mahindra Bank had a wilful defaulters list of Rs. 8,757 crore which is 22% higher on a year on year basis.
  • HDFC Bank has had a small change in their list, which showed a figure of Rs. 465 crore in December 2018.
  • Also, the Government has asked the banks to set up a separate fraud prevention wing to detect these cases at an early stage and the bankers are in discussions with IBA.

Wilful Defaulter:

  • A borrower is termed as a Wilful Defaulter
  • if he/she fails to meet repayment obligations in-spite of their having ample capacity to repay.
  • Not utilizing the loan for the specific purpose for which it was released and diverting it for other purposes.
  • In terms of RBI guidelines, a list of suit-filed and non-suit filed accounts of Wilful defaulters of Rs. 25 lakh or more has been advised to be submitted to CIBIL every month.
  • A team of high-ranking executives of banks will identify the wilful defaulters accounts and take a call to issue show cause notices to them.
  • This notice is reviewed by another committee which comprises of the Managing Director or Executive Office and two independent directors.

Author: Admin Bankedge

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