Govt to punish big-time offenders leaving the country

Coupled with Bankruptcy and other such Acts, this law would give more teeth to banks to recover dues

In his Budget speech, finance minister Arun Jaitley mentioned that the government would introduce a law that will make it possible to confiscate the assets of absconders who owe money to banks. The Budget documents did not provide any detail on this, as this was an intent and not related to the budget or policy issues.

"There have been instances of big time offenders fleeing the country to escape law. The government is considering legislative changes, and new law to confiscate assets of such persons," Jaitley said in his speech.

But this announcement is important as coupled with Bankruptcy and other such Acts, this law would give more teeth to the banks to recover their dues. 

Law enforcement agencies are seeking to extradite Vijay Mallya, the promoter of now defunct Kingfisher Airlines and Indian Premier League founder Lalit Modi on charges of financial irregularities. Mallya owes about Rs 9,000 crore to banks and is now settled at United Kingdom. Banks don’t have much option other than heading to the Supreme Court to get rights to all the assets Mallya owns, including shares of his cross holdings in some companies, but nothing much has been realised till now. 

However, according to experts, given most of the assets of such people are parked overseas, local banks would anyway not recover much in case a promoter is bent on defrauding lenders. Mallya’s domestic holding, for example, won’t cross a few hundred crores if banks have to realise them, say experts.