How to prevent Mehul Choksi-like heavy borrowers from fleeing India: Government mulls passport rule change

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Published: August 7, 2018 11:45:51 AM

After a slew of heavy borrowers including Nirav Modi and Mehul Choksi fled the country, a panel has recommended changes to the Passport Act to prevent offenders from leaving the country.

An interministerial panel headed by Banking Secretary Rajeev Kumar has recommended amending the Passport Act to prevent borrowers leaving the country.

After a slew of economic offenders including Nirav Modi and Mehul Choksi fled the country, an interministerial panel headed by Banking Secretary Rajeev Kumar has recommended amending the Passport Act to prevent borrowers leaving the country, television reports from ET Now and CNBC TV18 said citing an unidentified government official. Notably, the panel headed by DFS Secy has submitted recommendations to the Ministry of Home Affairs to amend the Passport Act. The proposed rule  says that persons who pose a ‘financial risk of a very high amount’ can be asked to stay back within India. Further, rules will prescribe a ‘reasonable classification of financial risk’ to country.  

Accordingly, after the new rule comes into effect, it will ensure that over a reasonably prescribed limit, if it’s determined that a high financial risk is involved, the borrower will be asked to participate in the resolution process, and they will be stopped from going out of India. The government will soon come out with a threshold limit, beyond which the lenders will be empowered to alert the enforcement agencies, ET Now reported.

The panel headed by the Financial Services Secretary Rajeev Kumar had representations from the ED and CBI too. The recommendations have been submitted to the Ministry of Home Affairs. The new rule will seek to define a reasonable classification for high financial risk. This rule change will will enable banks to red flag such cases to the authorities.

The move comes after the Indian government has handed over the extradition request for fugitive jeweller Mehul Choksi to the Antiguan authorities, news agency ANI reported. Choksi and his nephew Nirav Modi are wanted in the Rs 13,578-crore fraud in Punjab National Bank (PNB). India had earlier requested authorities in Antigua and Barbuda to detain Choksi after it received information about his presence in the country.  Meanwhile, Antigua officials said they couldn’t annul Choksi’s citizenship as that would violate their constitution. They claimed he got citizenship only after his credentials were “verified,” according to a report in the Indian Express.

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