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Amount Owed by Wilful Defaulters Spikes by Rs 1.2 Lk Cr since March 2019

The outstanding amount due from wilful defaulters increased by more than Rs 100 crore daily.
The Deeper Malaise Behind Rupee’s Free Fall

Representational Image. Image Courtesy: PTI

Prime Minister Narendra Modi’s July 22 claim that the UPA government “destroyed” the banking sector with “scams” while his government restored its “good financial health” stands severely dented with the amount due from wilful defaulters rising by, at least, Rs 1.2 lakh crore since March 2019.

According to a report of the Business Standard, the outstanding amount due from wilful defaulters rocketed at a pace of more than Rs 100 crore daily since March 2019.

The report, based on data from TransUnion CIBIL, states: “The data is updated by various financial institutions with varying frequency. The figures reflect the latest available numbers.”

Moreover, this amount could be an underestimate because, “at least, one nationalised bank and one private sector bank have not reported June numbers yet”.

The overall amount has remained more than the Rs 3 trillion mark for, at least, four quarters in a row, the report states.

The increase in such loans given by private banks and other financial institutions is much less compared to public banks, whose share in money owed by wilful defaulters was 77.5% in June this year.

Wilful defaulters owed an outstanding amount of Rs 53,500 crore to private banks. When it comes to 10 nationalised banks, they owe Rs 1.5 lakh crore with the State Bank of India’s share at Rs 80,000 crore as of June.

Maharashtra tops the list of wilful defaulters followed by Delhi, West Bengal, Gujarat and Tamil Nadu, according to the report, making more than 70% of the amount due (until the end of the previous fiscal).

The total amount outstanding increased from Rs 0.6 trillion to Rs 1.3 trillion during this time—a 200% increase from March 2019 and March 202 compared to 95% across all places in Delhi. The national capital recorded the fastest rise.

The Reserve Bank of India (RBI) recently proposed that wilful defaulters must be declared within six months of the loan becoming a non-performing asset (NPA). The Centre has asked for public comments on the proposal by October-end.

RTI replies, parliamentary questions and bank data have revealed the massive amounts of public money owed by big borrowers.

India ranks at number 10 on The Economist’s ‘crony capitalism’ index. Since 2013, wealth from “crony-capitalist sectors” rose from 5% to 8% of its GDP as per the index.

written reply to the Rajya Sabha by minister of state for finance Bhagwat Karad in the Monsoon Session caused a furore when he revealed that scheduled commercial banks “have written off an aggregate amount of Rs 10,57,326 crore during the last five financial years (RBI provisional data for FY 2022-23)”.

According to Karad, the top 10 wilful defaulters owe Rs 40,825 crore to scheduled commercial banks.

The top 50 loan defaulters owe Rs 87,295 crore to banks and financial institutions, according to the Union finance ministry.

Fugitive Mehul Choksi’s Gitanjali Gems is the biggest wilful defaulter at Rs 8,738 crore, followed by Era Infra Engineering Limited at Rs 5,750 crore, REI Agro Limited at Rs 5,148 crore, ABG Shipyard Limited at Rs 4,774 crore, and Concast Steel and Power Limited at Rs 3,911 crore.

As per a Business Today report this month, banks have filed suits against 36,150 NPA accounts to recover Rs 9.26 lakh crore in FY23.

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