GOVT ASKS BANKS TO ‘NAME AND SHAME’ WILFUL DEFAULTERS

Tightening the noose around wilful defaulters, the government has asked banks to 'name and shame' such borrowers by publishing their photographs and other details in newspapers.

The finance ministry has written a letter to all state-run banks, directing them to take onboard approvals for publication of photographs of such defaulters. Sources quoting advisory of the finance ministry said, “Lending institutions shall formulate a policy with the approval of their board of directors, which clearly set out the criteria for publication of photographs of wilful defaulters.” The number of wilful defaulters, who did not repay loans to public sector banks (PSBs) despite the capacity to do so, rose to 9,063 at the end of December 2017.

The amount involved for PSBs is reported as ~1,10,0.50 billion, Minister of State for Finance Shiv Pratap Shukla had said in a written reply in the Lok Sabha. Taking forward its fight against wilful defaulters, the government, last week, directed banks to seek passport details of borrowers taking loans of ~500 million and more. Passport details will help banks to take timely action and inform the relevant authorities to prevent fraudsters from fleeing the country.

“Next step in clean and responsible banking. Passport details must for loans above ~500 million. Step to ensure quick response in case of fraud,” Financial Services Secretary Rajiv Kumar had said. For all existing loans of over ~500 million, banks have been asked to collect passport details of borrowers within 45 days, he added. Several big defaulters like Nirav Modi, Mehul Choksi, Vijay Mallya and Jatin Mehta have fled the country putting the recovery mechanism in quandary. The government has tabled the Fugitive Economic Offenders Bill after Nirav Modi and his uncle Mehul Choksi allegedly defrauded stateowned Punjab National Bank (PNB) of ~127 billion and left the country and are refusing to cooperate with law enforcement agencies.