Moneylife: Pune: Tuesday, 22 August 2023.
As many as 369 big defaulters, with an outstanding of Rs100 crore and more, owe more than Rs1.39 lakh crore to scheduled commercial banks and all India financial institutes (AIFI). Gitanjali Gems Ltd, owned by fugitive businessman Mehul Choksi, remains the top wilful defaulter with an outstanding of Rs8,065 crore as of 31 March 2023, reveals a reply received under the Right to Information (RTI) Act.
According to information received under RTI by social activist Vivek Velankar, 2,491 wilful defaulters owe Rs2.05 lakh crore to banks. Out of this, 28 wilful defaulters of public sector banks (PSBs), who have an outstanding of Rs1,000 core and above, owe Rs64,103 crore.
Wilful defaulters who owe Rs500 crore to Rs1,000 crore are 33, and their dues are Rs22,545 crore. As many as 244 wilful defaulters in the range of Rs100 crore to Rs500 crore owe Rs53,284 crore. The number of wilful defaulters who owe between Rs50 crore to Rs100 crore is 252, and together, they have an outstanding of Rs17,491 crore, while 1,438 wilful defaulters owe less than Rs50 crore to banks, the analysis done by Mr Velankar shows.
Topping the list is Mr Choksi's scam-hit company, Gitanjali Gems, which owed Rs8,065 crore, besides other group companies, Gili India Ltd and Nakshatra Brands Ltd, which had taken loans of Rs1,447 crore and Rs1,280 crore, respectively.
The second wilful defaulter on the list is Era Infra Engineering Ltd, which owes Rs5,750 crore to Indian lenders.
ABG Shipyards Ltd, with an outstanding of Rs4,774 crore, is the third defaulter on the list. It is followed by REI Agro Ltd, with dues worth Rs4,754 crore. Its directors, Sandip Jhujhunwala and Sanjay Jhunjhunwala, have already been under the scanner of the enforcement directorate (ED) and central bureau of investigation (CBI) for the past few years.
The following two on the list are Concast Steel and Power Ltd (Rs3,911 crore) and Kanpur-based writing instruments giant Rotomac Global Pvt Ltd, part of the famed Kothari group, which owed Rs2,894 crore.
It is followed by absconding diamantaire Jatin Mehta's Winsome Diamonds & Jewellery, owing Rs2,706 crore and probed by the CBI for various bank frauds. Winsome Diamonds and its founder Jatin Mehta, with his wife Sonia and two sons Vipul and Suraj, vanished from India and have never returned, leaving behind a loan default documented at Rs6,800 crore, but could be more. (Read: Big Bank Defaulter Jatin Mehta of Winsome Diamonds: Let Off in India, May Be Nailed by UK Courts)
Frost International Ltd (Rs3,311 crore), Shri Lakshmi Cotsyn Ltd (Rs2180 crore) and Gwalior-based Zoom Developers Pvt Ltd, with Rs1,982 crore, are among the top 10 wilful defaulters.
In his RTI, Mr Velankar also
asked for information on wilful defaulters of State Bank of India (SBI). The
reply given by RBI shows that 496 wilful defaulters owe Rs24,680 crore to SBI.
"Banks claim they have filed cases against these wilful defaulters to recover their dues. However, the overall experience, over the years, is that banks are taking sizeable haircuts while recovering dues from wilful defaulters," Mr Velankar, who is also the president of Pune-based Sajag Nagrik Manch, says.
When it comes to sharing names of big wilful defaulters, except for a few, most banks refuse to provide the information using fictitious reasons. Only four banks, Punjab National Bank (PNB), IDBI Bank Ltd, Canara Bank and Bank of Maharashtra (BoM), have published the list of wilful defaulters on their websites.
"Union Bank of India (UBI) shared the list of wilful defaulters under RTI. However, all other PSBs, including SBI (where I am a shareholder too), neither publish names of wilful defaulters on their websites nor share the information under RTI. They use excuses like 'commercial confidence' and 'fiduciary relations' for not sharing names of wilful defaulters," Mr Velankar says.
The analysis by Mr Velankar shows nine big, wilful defaulters have taken loans from more than one bank or lender. It includes Concast Steel, Best Foods Ltd, Wind World (I) Ltd, BS Ltd, Rei Agro, Siddhivinayak Logistics Ltd, Gitanjali Gems, Moser Baer (l) Ltd and Shri Lal Mahal Ltd. These nine wilful defaulters owe Rs4,409 crore to SBI and Rs22,117 crore to other banks.
"While lending a few lakh rupees to a common borrower, banks ask to mortgage assets. When a common borrower takes a loan from one bank, others refuse to lend him more money. The board of directors of the banks sanctions clear loans of 100s of crores and above. In that case, how will it help to file only court cases for recovery? Who and when are we going to fix the responsibility of the bank boards? Will there be any inquiry by ED or CBI in these cases," he asks.
During the past five financial years, public sector banks (PSBs) have made an aggregate recovery of Rs4,80,111 crore from the non-performing asset (NPA) accounts and upgradation of NPAs of Rs1,45,356 crore. However, most PSBs refuse to share the names of big defaulters whose loans were settled through the national company law tribunal (NCLT), where these lenders have to accept a haircut on the outstanding.
While maintaining its new tradition of hiding the names of big defaulters, SBI accepted it took a haircut of about 63% or Rs74,886 crore while settling loans worth Rs1,18,677 crore through NCLT.
The stubborn refusal to share information by SBI and other public sector banks (PSBs) is surprising since they have no problem with confidentiality when it comes to small borrowers. All lenders regularly publish recovery advertisements in the newspapers with personal details and photos of smaller borrowers who have defaulted. The stubborn protection of big borrowers or large defaulters under various pretexts is baffling.
An aggrieved Mr Velankar asks, "When a common borrower defaults, the same banks publish his name and all details through advertisements in newspapers. Then, why do they want to keep the names of big defaulters hidden under the privacy clause? Why doesn't the 'privacy' clause apply while publicising names of common borrowers?"
During the past five financial years, scheduled commercial banks (SCBs) wrote off bad debts worth Rs10.09 lakh crore. As per data provided by RBI, PSBs have recovered Rs4.80 lakh crore, including the recovery of Rs1.03 lakh crore from written-off loans during the same period, the Lok Sabha was informed in December last year.
In a written reply, Dr Bhagwat Karad, minister of state for finance, says, "In the last five financial years, the PSBs have made an aggregate recovery of Rs4,80,111 crore from NPA accounts and upgradation of NPAs of Rs1,45,356 crore. Further, slippages into NPAs have reduced from Rs3,38,710 crore for FY16-17 to Rs1,44,315 crore for FY21-22, all of which has resulted in a decline of NPAs."
"The decline in NPAs
can also be due to write-off, which is primarily an exercise undertaken for
cleaning of balance-sheet, avail of tax benefit and optimise capital by PSBs,
as per RBI guidelines and banks' board approved policies," he added.
As many as 369 big defaulters, with an outstanding of Rs100 crore and more, owe more than Rs1.39 lakh crore to scheduled commercial banks and all India financial institutes (AIFI). Gitanjali Gems Ltd, owned by fugitive businessman Mehul Choksi, remains the top wilful defaulter with an outstanding of Rs8,065 crore as of 31 March 2023, reveals a reply received under the Right to Information (RTI) Act.
According to information received under RTI by social activist Vivek Velankar, 2,491 wilful defaulters owe Rs2.05 lakh crore to banks. Out of this, 28 wilful defaulters of public sector banks (PSBs), who have an outstanding of Rs1,000 core and above, owe Rs64,103 crore.
Wilful defaulters who owe Rs500 crore to Rs1,000 crore are 33, and their dues are Rs22,545 crore. As many as 244 wilful defaulters in the range of Rs100 crore to Rs500 crore owe Rs53,284 crore. The number of wilful defaulters who owe between Rs50 crore to Rs100 crore is 252, and together, they have an outstanding of Rs17,491 crore, while 1,438 wilful defaulters owe less than Rs50 crore to banks, the analysis done by Mr Velankar shows.
Topping the list is Mr Choksi's scam-hit company, Gitanjali Gems, which owed Rs8,065 crore, besides other group companies, Gili India Ltd and Nakshatra Brands Ltd, which had taken loans of Rs1,447 crore and Rs1,280 crore, respectively.
The second wilful defaulter on the list is Era Infra Engineering Ltd, which owes Rs5,750 crore to Indian lenders.
ABG Shipyards Ltd, with an outstanding of Rs4,774 crore, is the third defaulter on the list. It is followed by REI Agro Ltd, with dues worth Rs4,754 crore. Its directors, Sandip Jhujhunwala and Sanjay Jhunjhunwala, have already been under the scanner of the enforcement directorate (ED) and central bureau of investigation (CBI) for the past few years.
The following two on the list are Concast Steel and Power Ltd (Rs3,911 crore) and Kanpur-based writing instruments giant Rotomac Global Pvt Ltd, part of the famed Kothari group, which owed Rs2,894 crore.
It is followed by absconding diamantaire Jatin Mehta's Winsome Diamonds & Jewellery, owing Rs2,706 crore and probed by the CBI for various bank frauds. Winsome Diamonds and its founder Jatin Mehta, with his wife Sonia and two sons Vipul and Suraj, vanished from India and have never returned, leaving behind a loan default documented at Rs6,800 crore, but could be more. (Read: Big Bank Defaulter Jatin Mehta of Winsome Diamonds: Let Off in India, May Be Nailed by UK Courts)
Frost International Ltd (Rs3,311 crore), Shri Lakshmi Cotsyn Ltd (Rs2180 crore) and Gwalior-based Zoom Developers Pvt Ltd, with Rs1,982 crore, are among the top 10 wilful defaulters.
"Banks claim they have filed cases against these wilful defaulters to recover their dues. However, the overall experience, over the years, is that banks are taking sizeable haircuts while recovering dues from wilful defaulters," Mr Velankar, who is also the president of Pune-based Sajag Nagrik Manch, says.
When it comes to sharing names of big wilful defaulters, except for a few, most banks refuse to provide the information using fictitious reasons. Only four banks, Punjab National Bank (PNB), IDBI Bank Ltd, Canara Bank and Bank of Maharashtra (BoM), have published the list of wilful defaulters on their websites.
"Union Bank of India (UBI) shared the list of wilful defaulters under RTI. However, all other PSBs, including SBI (where I am a shareholder too), neither publish names of wilful defaulters on their websites nor share the information under RTI. They use excuses like 'commercial confidence' and 'fiduciary relations' for not sharing names of wilful defaulters," Mr Velankar says.
The analysis by Mr Velankar shows nine big, wilful defaulters have taken loans from more than one bank or lender. It includes Concast Steel, Best Foods Ltd, Wind World (I) Ltd, BS Ltd, Rei Agro, Siddhivinayak Logistics Ltd, Gitanjali Gems, Moser Baer (l) Ltd and Shri Lal Mahal Ltd. These nine wilful defaulters owe Rs4,409 crore to SBI and Rs22,117 crore to other banks.
"While lending a few lakh rupees to a common borrower, banks ask to mortgage assets. When a common borrower takes a loan from one bank, others refuse to lend him more money. The board of directors of the banks sanctions clear loans of 100s of crores and above. In that case, how will it help to file only court cases for recovery? Who and when are we going to fix the responsibility of the bank boards? Will there be any inquiry by ED or CBI in these cases," he asks.
During the past five financial years, public sector banks (PSBs) have made an aggregate recovery of Rs4,80,111 crore from the non-performing asset (NPA) accounts and upgradation of NPAs of Rs1,45,356 crore. However, most PSBs refuse to share the names of big defaulters whose loans were settled through the national company law tribunal (NCLT), where these lenders have to accept a haircut on the outstanding.
While maintaining its new tradition of hiding the names of big defaulters, SBI accepted it took a haircut of about 63% or Rs74,886 crore while settling loans worth Rs1,18,677 crore through NCLT.
The stubborn refusal to share information by SBI and other public sector banks (PSBs) is surprising since they have no problem with confidentiality when it comes to small borrowers. All lenders regularly publish recovery advertisements in the newspapers with personal details and photos of smaller borrowers who have defaulted. The stubborn protection of big borrowers or large defaulters under various pretexts is baffling.
An aggrieved Mr Velankar asks, "When a common borrower defaults, the same banks publish his name and all details through advertisements in newspapers. Then, why do they want to keep the names of big defaulters hidden under the privacy clause? Why doesn't the 'privacy' clause apply while publicising names of common borrowers?"
During the past five financial years, scheduled commercial banks (SCBs) wrote off bad debts worth Rs10.09 lakh crore. As per data provided by RBI, PSBs have recovered Rs4.80 lakh crore, including the recovery of Rs1.03 lakh crore from written-off loans during the same period, the Lok Sabha was informed in December last year.
In a written reply, Dr Bhagwat Karad, minister of state for finance, says, "In the last five financial years, the PSBs have made an aggregate recovery of Rs4,80,111 crore from NPA accounts and upgradation of NPAs of Rs1,45,356 crore. Further, slippages into NPAs have reduced from Rs3,38,710 crore for FY16-17 to Rs1,44,315 crore for FY21-22, all of which has resulted in a decline of NPAs."
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