Top 50 wilful defaulters owe banks Rs 87,295 cr; Mehul Choksi No. 1: Govt

The top 50 wilful defaulters owe banks and financial institutions in India Rs 87,295 crore, the finance ministry said on Tuesday (August 1). The list includes fugitive Mehul Choksi’s Gitanjali Gems, Era Infra Engineering, REI Agro, and ABG Shipyard.

Of these 50, the top 10 wilful defaulters owe scheduled commercial banks (SCBs) Rs 40,825 crore, Minister of State for Finance Bhagwat Karad said in a written reply to Rajya Sabha. SCBs have written off an aggregate amount of Rs 10,57,326 crore over the past five financial years (RBI provisional data for FY 2022-23), he said.

“The Reserve Bank of India (RBI) has apprised that the amount owed by top 50 wilful defaulters in SCBs was Rs 87,295 crore as on March 31, 2023,” he said.

Gitanjali Gems owes banks Rs 8,738 crore. It is followed by Era Infra Engineering, which owes banks Rs 5,750 crore, REI Agro Rs 5,148 crore, ABG Shipyard Rs 4,774 crore, and Concast Steel and Power Rs 3,911 crore.

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Other wilful defaulters are Rotomac Global Pvt Ltd (Rs 2,894 crore), Winsome Diamonds and Jewellery (Rs 2,846 crore), Frost International (Rs 2,518 crore), Shri Lakshmi Cotsyn (Rs 2,180 crore) and Zoom Developers Pvt Ltd (Rs 2,066 crore).

“Compromise settlement not new”

Karad said the provision enabling banks to enter a settlement in respect of borrowers categorised as fraudulent or wilful defaulter is not a new regulatory instruction and has been the settled regulatory stance for more than 15 years.

“RBI had advised IBA, vide letter dated May 10, 2007, that, banks may enter into compromise settlement with wilful defaulters/fraudulent borrowers without prejudice to the criminal proceeding underway against such borrowers and all such cases of compromise settlements should be vetted by Management Committee/Board of banks,” he said.

Furthermore, he said, compromise settlement with borrowers classified as wilful defaulters or fraudulent borrowers is also covered in RBI’s Master Circular on Wilful Defaulters dated July 1, 2015 and Master Directions on Frauds dated July 1, 2016.

The compromise settlement, however, is not a matter of right for the borrower but is a discretion to be exercised by lenders based on their commercial judgements, he said.

According to an RBI circular dated June 8, 2023, he said, regulated entities may undertake compromise settlements or technical write-offs in respect of accounts classified as fraud or wilful defaulter without prejudice to the criminal proceeding underway against such borrowers, and all such proposals need to be approved by the board.

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According to inputs received from RBI, he said, the framework prescribes a minimum cooling-off period of 12 months as a general prescription for normal cases of compromise settlements, without prejudice to the penal measures applicable in respect of borrowers classified as wilful defaulter.

“Such penal measures, according to the RBI’s Master Circular on Wilful Defaulters dated July 1, 2015, entail, inter alia, that no additional facilities should be granted by any bank/financial institutions to borrowers listed as wilful defaulters, and that such companies (including their entrepreneurs/promoters) get debarred from institutional finance for floating new ventures for a period of five years from the date of removal of their name from the list of wilful defaulters,” he said.

66,069 frauds reported in 2022-23

In a separate reply, Karad said 66,069 frauds were reported in 2022-23 causing a loss of Rs 85.25 crore. In the previous year, 65,893 frauds were reported with financial implication of Rs 115.36 crore. To prevent fraudulent online transactions, RBI has been issuing various instructions to the regulated entities from time to time, he said.

“RBI had issued a comprehensive circular on Cyber Security Framework for Banks in June, 2016 and for Urban Cooperative Banks in October, 2018, respectively. According to these circulars, banks were advised to put in place a board-approved cyber security policy elucidating the strategy containing an appropriate approach to combat cyber threats given the level of complexity of business and acceptable levels of risk,” he said.

Furthermore, he said, to enhance the cyber security posture of online transaction and prevent cyber frauds, Indian Computer Emergency Response Team (CERT-In) issues alerts and advisories regarding the latest cyber threats/vulnerabilities and countermeasures to protect computers and networks on an ongoing basis, tracking and disabling phishing websites, and facilitating the investigation of fraudulent activities in coordination with service providers, regulators, and law-enforcement agencies.

Regarding complaints received by the JanSamarth Portal, he said, total 23,276 grievances have been received since its launch, of which 21,250 have been closed in a time-bound manner. The JanSamarth Portal was launched to provide a common platform for taking loans under a few credit-linked government schemes to start with.

(With agency inputs)