In a response to an RTI filed by Saket Gokhale, the central bank declined to offer names of wilful defaulters as on February 16, 2020, stating that this data is not available.
The loans outstanding written off — in technical or prudential terms — on account of exposures to the top 50 wilful defaulters as on September 30, 2019, was Rs 68,607 crore, the Reserve Bank of India (RBI) has said in a right-to-information (RTI) response. Gitanjali Gems, REI Agro and Winsome Diamonds and Jewellery were the three top wilful defaulters to Indian banks.
In a response to an RTI filed by Saket Gokhale, the central bank declined to offer names of wilful defaulters as on February 16, 2020, stating that this data is not available. The RBI also cited the Section 8 (1) of the RBI Act and the Supreme Court’s judgment in the Jayantilal N Mistry case to withhold information on overseas borrowers.
The list of top 50 defaulters includes names like Ruchi Soya Industries, which has been resolved under the Insolvency and Bankruptcy Code (IBC), and ABG Shipyard, which has gone into liquidation after a resolution could not be found.
A ‘wilful default’ would be deemed to have occurred if a borrower has defaulted in meeting their payment or repayment obligations to the lender even when they have the capacity to honour the said obligations. Wilful default is also deemed to have occurred if a borrower has not utilised the finance from the lender for the specific purposes for which finance was availed of but has diverted the funds for other purposes. Siphoning off of the funds or removal of movable fixed assets or immovable property given as security without the knowledge of the lender also constitutes wilful default.
In a master circular on July 1, 2015, the RBI had said no additional facilities should be granted by any bank or financial institution to listed wilful defaulters.
In addition, such companies (including their entrepreneurs or promoters) where banks have identified siphoning or diversion of funds, misrepresentation, falsification of accounts and fraudulent transactions should be debarred from institutional finance from the scheduled commercial banks, financial institutions, and non-banking financial companies (NBFCs) for floating new ventures for a period of five years from the date of removal of their name from the list of wilful defaulters as published by the RBI or credit information companies.
Bankers have been seeking more clarity on how to distinguish between cases of wilful default and diversion of funds. Most recently, banks brought up the matter with the RBI in a meeting on March 2, requesting that rules be framed around how to make this distinction.