Wilful Defaulters on the rise


Finance Minister Nirmala Sitharaman was addressing a session of the Lok Sabha on Monday. On being asked a question as to whether the cases of wilful defaulters of banks have increased over the last five years, she revealed data which did not make for a pretty reading and gave us a glimpse into the state of the economy as well as how lightly recovery activity in public sector banks are undertaken.

The minister said the number of wilful defaulters in nationalised banks or public sector banks, which number 17 across India, have increased by about 60% to 8,582 in March 2019 from 5,349 in F.Y. 2014-15, which is period of five years.

A wilful defaulter is an entity or person that has not paid back a loan despite having the capacity to do so.

She also gave a year by year break-up of the ever increasing amount of wilful defaulters that have been rising consistently stating that the number of such borrowers increased to 6,575 in 2015-16, 7,079 in 2016-17, 7,535 in 2017-18 and 8,582 in 2018-19.

The Finance Minister further went on to say that a recovery of ₹ 7,654 crore has been done from such wilful defaulters during the last five years and also claimed that they have been acted against comprehensively. Some steps taken to curb this menace include not sanctioning any additional facilities by banks and financial institutions, debarring them from floating new ventures for a period of five years, initiating criminal proceedings, promoters being debarred from accessing capital markets, wilful defaulters have also been barred from participating in insolvency resolution process under the IBC Code, acts such as Fugitive Economic Offenders Act of 2018 providing for attachment and confiscation of their property and the government has also advised public sector banks to publish photographs of such defaulters and issue look out notices.

The most recent case of a high profile individual being declared as a wilful defaulter is that of Birla Scion Yash Birla who is the cousin of Billionaire business tycoon Kumar Mangalam Birla. He was given the tag after he failed to repay loans to the tune of ₹ 67,65,00,000 by Kolkata based UCO Bank, the very same bank that was founded by his great grand uncle Ghanshyam Das Birla in 1943. However, it was later nationalized in 1969.

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