Maharashtra bank union says Rs84,580 crore in wilful defaults
The Maharashtra State Bank Employees Federation released the list with names and amount outstanding as on 30 March
Mumbai: A bank union in Maharashtra on Thursday released a list of wilful defaulters of loans over ₹ 1 crore each that totalled ₹ 84,579.72 crore.
Maharashtra State Bank Employees Federation released the list with names and amount outstanding as on 30 March. The union’s general secretary Vishwas Utagi claimed the list been prepared by the Reserve Bank of India (RBI). Mint could not independently verify the claim.
While the central bank tracks wilful defaulters closely and maintains a list, it is not available to the public. It is, however, circulated among banks to prevent further lending to such firms and individuals.
RBI has not released the total quantum of loans classified under the wilful default category but in a 2 December interaction with the media, governor Raghuram Rajan had said the number was large.
“It’s big, depending on what you call big, but I would doubt that it would extend into the lakhs of crore. I think it would be more in the tens of thousands of crore. That in itself is a big number, but it’s not the central number that’s responsible for the weakness in the banking sector in terms of stressed assets," said Rajan.
Under the present RBI guidelines issued in July 2012, a wilful default is said to have happened when either a borrower has not paid the bank even if he has the capacity to repay, when the funds sanctioned by the bank have been diverted by the borrower for other purposes, when the borrower has siphoned off funds sanctioned by the bank or when the borrower, without the knowledge of the lender, has disposed of the property or moveable assets which were pledged for availing the loan.
Once a company is termed as a wilful defaulter, it cannot access further financing from the banking sector.
Rajan has been stressing the need to deal firmly with wilful defaulters and termed such defaulters as freeloaders in a 25 November speech. RBI has also tightened its rules and created a new category called non-cooperative borrowers and has asked banks to make higher provisions against any further lending to such firms and promoters.
According to the list released by the Maharashtra State Bank Employees Federation, the total number of wilful defaulter accounts stands at 4,387. Maharashtra tops the list of states with most wilful defaulters. In Maharashtra, 1,145 accounts, amounting to ₹ 34,585.43 crore, has wilfully defaulted on repayments. This is followed by Delhi, with 423 accounts defaulting on ₹ 8,367.05 crore and West Bengal, with 526 accounts defaulting on ₹ 6,635.08 crore.
The list doesn’t have all-India details of banks and the defaulters, but in Maharashtra the highest outstanding wilful default was seen at Life Insurance Corp. of India (LIC). LIC’s wilful default outstanding as on March 2014 was at ₹ 10,109.59 crore, followed by Central Bank of India at ₹ 3430.19 crore and State Bank of India at ₹ 2,876.55 crore.
The union also released names of a number of companies, including that of Kingfisher Airlines Ltd. Banks, including United Bank of India, are in the process of declaring them wilful defaulters. However, last week, the Calcutta high court quashed that claim on technical grounds.
Mint is not publishing the names of these companies as there is no independent confirmation that the companies names have been declared as wilful defaulters.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!