BANKLOOT
IANS 05 February 2024
It has been several years since high-profile economic offenders such as Vijay Mallya and Nirav Modi made headlines by fleeing the country, leaving a trail of unpaid debts amounting to thousands of crores from Indian banks.

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The Bombay High Court has refused to squash the arrest and remand of Naresh Goyal, founder of Jet Airways, by the enforcement directorate (ED) on 1st September on charges of money laundering.

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Artha Sastry 08 September 2023
Fans of the iconic British serials Yes Minister and Yes Prime Minister, may recall the wily Humphrey Appleby advising the hapless Jim Hacker that major government announcements are usually accompanied by gentle Elgar melodies and conservative dress, while minor changes are boosted by bold Stravinsky tunes and perhaps a flamboyant necktie! Here in India, an innocuous-looking amendment by the Reserve Bank of India (RBI) in June, with neither Elgar nor Stravinsky accompaniments, is already turning into an opportunity to allow defaulters to get substantial chunks of their loans written off, while retaining their companies.

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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.

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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.

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Moneylife Digital Team 24 July 2023
Reserve Bank of India (RBI), responding to a Right to Information (RTI) query, says during the financial year (FY) 2022-23, banks in the country wrote off bad loans worth Rs2.09 lakh crore, taking the total write-off by the banking sector to Rs10.57 lakh crore during the past five years, says a report.

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IDBI Bank Ltd, which has received multiple bailouts in the past few years, recovered just 7% from big defaulters who have an outstanding of Rs100 crore and more, from Rs45,536 crore bad loans it wrote off since financial year (FY)2016-17. What is more shocking is IDBI Bank took a haircut of 60% while settling loans worth Rs15,623 crore through the national company law tribunal (NCLT), reveals a reply received under the Right to Information (RTI) Act. IDBI Bank was re-categorised as a private sector lender in January 2019 after the Life Insurance Corporation of India (LIC) increased its stake to 51% in the lender.

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Loan write-offs by government owned and private banks have shown a phenomenal increase contrary to the government claims, said People's Commission on Public Sector and Public Services.

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Maintaining the 'tradition' of public sector banks (PSBs) of keeping hidden the names of big and wilful defaulters, the Central Bank of India (CBI) says information about defaulter-borrowers whose loans worth Rs100 crore and above are written off, is related to third-party and hence cannot be provided. Since FY2016-17, the Bank wrote off bad debts worth Rs21,085 crore of these big defaulters while recovering just 10% or Rs2,031 crore. Interestingly, speaking about haircuts it suffered while recovering bad loans of big defaulters, CBI simply says the query is unclear and hence cannot be replied to!

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When it comes to loan recovery from small borrowers, lenders use every resource available, including, but not limited to, publishing the debtors' names, to hustle them to repay. However, when the bad debt soars to Rs100 crore or more, the same lenders work hard to hide the names and other information of these big defaulters.

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Last month, the Reserve Bank of India (RBI) organised a conference of the directors of public sector banks (PSBs). In his inaugural address, the RBI governor made some startling comments. He said,

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The government and policy-makers keep reiterating that writing off a bad loan does not mean the bank cannot recover it. When a bad debt is written down, some bad loan value remains as an asset because the lender expects to recover it. But it hardly happens. Especially for public sector banks (PSBs), the recovery from bad loans written off is relatively low. If fact, according to information provided by the Union government in Parliament, from FY17-18 to FY21-22, all scheduled commercial banks (SCBs) recovered just 13% of the loans written off.

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Banking frauds can be somewhat crude. Take Nirav Modi, for instance. He bribed a bank official to keep giving him facilities far in excess of his approved limits. This was a ‘breach of trust’ by an employee, exacerbated by the failure of the bank’s control systems.

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Moneylife Digital Team 23 December 2022
During the past five financial years, scheduled commercial banks (SCBs) wrote off bad debts worth Rs10.09 lakh crore.

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IANS 23 December 2022
The Central Bureau of Investigation (CBI) has registered a case on a complaint from Union Bank of India against a Kolkata-based private company, its directors and others for cheating a consortium of banks to the tune of Rs 4037.87 crore.

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IANS 16 December 2022
The Central Bureau of Investigation (CBI) on Friday registered two fresh FIRs against fugitive businessman Mehul Choksi,

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Moneylife Digital Team 16 December 2022
The UK High Court (HC), which last month dismissed an appeal filed by fugitive diamond merchant Nirav Modi,

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Winsome Diamonds was a massive corporate default that burst on the business world sometime in 2013—in the same manner as Gitanjali Gems and Niraav Modi.

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Canara Bank, the country's fourth-largest public sector bank (PSB), continues to write off bad loans of big defaulters who have borrowed Rs100 crore and more.

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Following the footsteps of State Bank of India (SBI) and Bank of Maharashtra, another public sector lender, Indian Overseas Bank (IOB), has decided to keep hidden this year the names of big defaulters who have borrowed Rs100 crore and more, which were written off from its books.

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