Bad Debt: Wilful defaults on a rise, up 90% in ’14 to ‘44,465’ crore

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New Delhi | May 29, 2015 8:13 AM

From Vindhyavasini group to Winsome, Forever Precious Jewellery, Yash Birla’s Zenith Birla and NAFED, the list of wilful defaulters is growing at a fast pace.

bad loan yash birlaFigure close to 15% of total non-performing assets of Rs3,03,380 cr; Rise highest ever in a calendar year. (Reuters)

From Vindhyavasini group to Winsome, Forever Precious Jewellery, Yash Birla’s Zenith Birla and even a government company called NAFED, the list of wilful defaulters is growing at a fast pace. Wilful defaults — or defaults by borrowers who have the capacity to repay or those who have diverted funds — have jumped by nearly 90 per cent to Rs 44,465 crore as of December 2014 from Rs 23,427 crore in December 2013, according to figures compiled by Credit Information Bureau (India) Ltd.

While this is close to 15 per cent of the total non-performing assets of Rs 3,03,380 crore, the Rs 21,000 crore addition to the wilful default list in 2014 is the biggest rise in any calendar year. The figure could cross the Rs 50,000 crore mark as some leading banks like Canara Bank, IOB, Union Bank, Corporation Bank and Dena Bank are yet to submit the figures. Banks which were struggling for recovery of bad loans are likely to end up writing off these loans.

This is at a time when the total write-off by public sector banks has amounted to Rs 1,17,175 crore as on December 2014 as against Rs 92,154 crore in March 2014, a Finance Ministry report reveals. While the percentage of recovery from write-offs is just 8.31 per cent, additions work out to 36.79 per cent.

State Bank of India tops of the list of banks having highest number of wilful defaults with Rs 10,711 crore due from 1,038 accounts of rogue borrowers. It has filed cases against four companies in the Vindhyavasini group for recovery of Rs 455 crore, Yash Birla-owned Zenith Birla Rs 139 crore and JB Diamond Rs 140 crore. It has also moved against Agnite Education Rs 335 crore and Teledate Rs 178 crore which has listed K Balasubramanian and K Padmanabhan as directors.

Punjab National Bank has filed cases against Winsome Diamond for recovery of Rs 900 crore and Forever Precious which has defaulted Rs 747 crore. In both the cases, Jatin Mehta is the key promoter director. PNB has also slapped against Zoom Developers for recovery of Rs 410 crore where BL Kejriwal, Michael Starling and Vijay Choudhary have been listed as directors. Central Bank of India has also filed suits to recover Rs 549 crore from Winsome and Rs 254 crore from Forever Precious. It has also slapped a suit against S Kumars Nationwide for recovery of Rs 283 crore.

PNB has also hauled troubled National Agricultural Cooperative Marketing Federation of India Ltd (NAFED), the apex organization of marketing cooperatives for agricultural produce in India, under the Ministry of Agriculture, to the court for recovery of Rs 224 crore. Oriental Bank of India has gone to court against Zoom for Rs 127 crore and Winsome for Rs 150 crore.

While bankers say most of the wilful default cases are allegedly frauds committed by the promoters and money has been siphoned off from the companies, cases filed by banks have been lingering in the courts and debt recovery tribunals for many years. The RBI had recently brought guarantors also under the wilful defaulter category, but experts said this is like shutting the stable doors after the horses have fled.

If the guarantor refuses to comply with the demand made by the banker, despite having sufficient means to make payment of the dues, such guarantor would also be treated as a wilful defaulter, the RBI says. Further, although the RBI has said wherever possible, the banks should adopt a proactive approach for a change of management of the wilfully defaulting borrower unit, this rarely happens.

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