Top 50 wilful defaulters owe Rs 87,295 cr to banks: Finance Minister

The finance ministry on Tuesday said top 50 wilful defaulters including Gitanjali Gems Limited, Era Infra Engineering Limited, REI Agro Limited, and ABG Shipyard Limited owe Rs 87,295 crore to banks and financial institutions.

Of this, top 10 wilful defaulters owe Rs 40,825 crore to schedule commercial banks (SCBs), Minister of State for Finance Bhagwat Karad said in a written reply in Rajya Sabha.

SCBs have written off an aggregate amount of Rs 10,57,326 crore during the last five financial years (RBI provisional data for FY 2022-23), he said.

"The Reserve bank of India (RBI) has apprised that the amount owed by top 50 wilful defaulters in SCBs was Rs 87,295 crore as on March 31, 2023," he said.

Fugitive Mehul Choksi's Gitanjali Gems is the biggest wilful defaulter owing Rs 8,738 crore to banks. It is followed by Era Infra Engineering Limited owing Rs 5,750 crore, REI Agro Limited Rs 5,148 crore, ABG Shipyard Limited Rs 4,774 crore, and Concast Steel and Power Limited Rs 3,911 crore.

Other wilful defaults are Rotomac Global Private Limited Rs 2,894 crore, Winsome Diamonds and Jewellery Limited Rs 2,846 crore, Frost International Limited Rs 2,518 crore, Shri Lakshmi Cotsyn Limited Rs 2,180 crore and Zoom Developers Private Limited Rs 2,066 crore.

Karad said the provision enabling banks to enter into compromise settlement in respect of borrowers categorised as fraud or wilful defaulter is not a new regulatory instruction and has been the settled regulatory stance for more than fifteen years.

"RBI had advised IBA, vide letter dated May 10, 2007, that, banks may enter into compromise settlement with wilful defaulters/ fraudulent borrowers without prejudice to the criminal proceeding underway against such borrowers and all such cases of compromise settlements should be vetted by Management Committee/Board of banks," he said.

Further, he said, compromise settlement with borrowers classified as wilful defaulters or fraud is also covered in RBI's Master Circular on Wilful Defaulters dated July 1, 2015 and Master Directions on Frauds dated July 1, 2016.

The compromise settlement, however, is not a matter of right for borrower but is a discretion to be exercised by lenders based on their commercial judgements, he said.

As per RBI's circular dated June 8, 2023, he said, regulated entities may undertake compromise settlements or technical write-offs in respect of accounts classified as fraud or wilful defaulter without prejudice to the criminal proceeding underway against such borrowers, and all such proposals need to be approved by the board.

As per inputs received from RBI, he said, the framework prescribes minimum cooling-off period of 12 months as a general prescription for normal cases of compromise settlements, without prejudice to the penal measures applicable in respect of borrowers classified as wilful defaulter.

"Such penal measures, as per the RBI's Master Circular on Wilful Defaulters dated July 1, 2015, entail, inter alia, that no additional facilities should be granted by any bank/financial institutions to borrowers listed as wilful defaulters, and that such companies (including their entrepreneurs/promoters) get debarred from institutional finance for floating new ventures for a period of five years from the date of removal of their name from the list of wilful defaulters," he said.

Replying to another question, Karad said public at large have benefited from the amalgamation as the amalgamated bank is offering enhanced access to banking services through a stronger and larger network, greater financial inclusion of the underprivileged, wider and customised array of banking and other financial products and services, and improved digital experience through investments in technology.

Employees have benefited through opening up of wider career and geographical opportunities, enhanced depth and breadth of employees' exposure and improved perquisites through harmonisation of benefits on best-across-banks basis, while ensuring that no employee has lost his or her job as a result of the amalgamation, he said.

In a separate reply, Karad said 66,069 frauds were reported in 2022-23 causing a loss of Rs 85.25 crore. In the previous year, 65,893 frauds were reported with financial implication of Rs 115.36 crore.

In order to prevent fraudulent online transactions, he said, RBI has been issuing various instructions to the regulated entities from time to time.

"RBI had issued a comprehensive circular on Cyber Security Framework for Banks in June, 2016 and for Urban Cooperative Banks in October, 2018 respectively. As per these circulars, banks were advised to put in place a board-approved cyber security policy elucidating the strategy containing an appropriate approach to combat cyber threats given the level of complexity of business and acceptable levels of risk," he said.

Further, he said, to enhance the cyber security posture of online transaction and prevent cyber frauds, Indian Computer Emergency Response Team (CERT-In) issues alerts and advisories regarding latest cyber threats/vulnerabilities and countermeasures to protect computers and networks on an ongoing basis, tracking and disabling phishing websites and facilitating the investigation of fraudulent activities in coordination with service providers, regulators, and law enforcement agencies.

With regard to complaints received by the JanSamarth Portal, he said, total 23,276 grievances have been received since its launch, out of which 21,250 complaints have been closed in a time-bound manner.

JanSamarth Portal was launched to provide a common platform for availing loan under few credit-linked government schemes to start with.