Warning wilful defaulters of government's wrath, Finance Minister, Arun Jaitley, on Thursday said: “If you (wilful defaulters) think you can just physically swim across the shores and avoid paying debts, then I don’t think the system will entirely ignore this,” Jailtey said at the FE Best Banks Awards function.
Warning wilful defaulters of government’s wrath, Finance Minister, Arun Jaitley, on Thursday said: “If you (wilful defaulters) think you can just physically swim across the shores and avoid paying debts, then I don’t think the system will entirely ignore this,” Jailtey said at the FE Best Banks Awards function.
While the Government’s resolve to track those who escaped from the country after wilfully defrauding Indian banks is laudatory, the question that begs to be answered is how many such cases fall under this category? To most, just one name would come to mind : Vijay Mallya.
- Farmer unions say they will go ahead with tractor march in Delhi on Republic Day
- Mamata Banerjee's TMC leaders, MLAs accused of taking COVID-19 vaccine shots meant for health workers by BJP
- Give up stubborn stand and come for clause by clause discussion on January 19: Narendra Singh Tomar to protesting farmer unions
Mallya, who owes around Rs 6,000 crore to a consortium of Indian banks which extended loans to his now defunct Kingfisher Airlines, has been categorised as a ‘wilful defaulter’, a status which he disputes.
While Mallya owes Rs 6,000 crore, the estimated amount owed by all those categorised as ‘wilful defaulters’ is said to be around Rs 70,000 crore. This estimate was before PSU bank results for end June 2016 showed the bad debts of 24 PSU banks doubled to over Rs 5,71,444 crore. It is an ocean of bad debts. With the clean-up efforts still on, the total bad debts are only set to rise in coming months. It could be safe to assume that the doubling of gross NPAs over the past year would have added to the wilful default figures too.
But beyond Mallya, who else is facing the ire of government, the regulator and the enforcement agencies? And what is the net result? At least, we do not hear of any concrete action or updates like the Mallya case. To be fair to Mallya, he had offered before the Supreme Court hearing his case some months ago to repay Rs 4,000 crore out of his outstanding debt, a chance which banks could have lapped up bringing down the outstanding by a third. The reason for refusing to accept Mallya’s offer may not have been sound business judgement.
And now, a lot of effort of government and enforcement agencies are being directed at getting Mallya back. But was he alone in Kingfisher’s alleged defrauding of the banks? Were there not other company officials who were part of the deals and were in the know of things and hence complicit, the bank officials who may have conspired while extended the loans and the auditors who may have presented a wrong picture.
Money owed to banks is depositors’ money. The public at large would also like to see the same zeal within in the government and agencies in hunting down other wilful defaulters and be posted of the measures being taken. Just targeting Mallya may be a good tool to appear serious about the issue of debt recovery, but eventually that may not be enough.
The fact is that despite all the efforts by the Indian government’s machinery trying to dig out laws and treaties (including the two decade old Mutual Legal Assistance Treaty – MLAT – with UK) to get back Mallya into the country, it would be virtually impossible to drag him back given the legal options available for him to continue his stay in the UK.
The loan recovery net and legal action should be widened and concerted efforts should be made to nail down as many wilful defaulters as possible.