Even as the Centre and the RBI have been pushing forth quick resolution of banks’ existing stockpile of bad loans, fresh defaults by erring promoters continue to rise. Data put out by the Credit Information Bureau of (India) (CIBIL) shows that wilful defaulters with outstanding loan balances of over Rs 25 lakh (where suits have been filed) owed banks around Rs 1,09,594 crore as on March 2017, a jump of 46 per cent over the previous year. A year back, in 2015-16, loans due by wilful defaulters had grown by 31 per cent over the previous year, after increasing by 44 per cent and 55 per cent in 2014-15 and 2013-14 respectively.
The steady rise in wilful defaults despite the RBI tightening the noose around promoters over the past couple of years is worrisome.
RBI lays down four scenarios under which a person or company can be declared a wilful defaulter. One, the borrower fails to meet his dues even if he has the ability to pay. Two, the borrower has diverted the money away from the intended purpose. Three, the money is siphoned off and used by the borrower for purposes which are unrelated to his operation. Finally, if the borrower sells off the asset which he bought with the loan taken, without the knowledge of the bank, then too he can be deemed a wilful defaulter.
Banks are required to submit the list of wilful defaulters with outstanding loan balances of over Rs 25 lakh (where suits have been filed) to credit information companies such as CIBIL.
As of March 2013, wilful defaulters owed banks around Rs 25,000 crore, which has quadrupled over the past four years to over a lakh crore in 2016-17.
Among the top wilful defaulters as of March 2017 is Kingfisher Airlines, owing SBI about Rs 1,200 crore, followed by Beta Naphthol that owes Kotak Mahindra Bank about Rs 1,199 crore. Of the top 10 wilful defaulters, two were borrowers of Kotak Bank, while five were from Vijaya Bank, owing the bank a total of around Rs 4,800 crore of loans as of March 2017.
Multiple entries
In many cases, borrowers have defaulted across banks. For instance, aside from Kingfisher Airlines, Zoom Developers, is also named a wilful defaulter by multiple lenders —Corporation Bank, Andhra Bank, Dena Bank, Bank of Baroda, PNB, Federal Bank etc. Zylog Systems, Winsome Diamonds, ABC Cotspin and REI Agro are some of the other defaulters who have been declared wilful defaulters by multiple banks.
Private lenders too
While a chunk of the large defaulter accounts pertain to public sector banks, private banks too appear to be grappling with such freeloaders. Deccan Chronicle Holdings, Shree Ganesh Jewellery, REI Agro owe Axis Bank a few hundred crores, and Kemrock Industries and Geodesic, named wilful defaulters by ICICI Bank, are examples. HDFC Bank that boasts of one of the lowest delinquency rates within the sector, also appears to be dealing with some one-off cases. Indian Technomac Company, Shree Minal Oil & Agro, Gee Ispat and Sri Mappillai Vinayagar Spg. Mills are some borrowers that have been declared wilful defaulters by the private lender.