Yes Bank tags Cox & Kings, group cos wilful defaulters2 min read . Updated: 14 Oct 2020, 07:25 AM IST
The travel and tourism firm and related entities owe more than ₹1,800 cr to the bank
Yes Bank Ltd has classified Cox & Kings, its non-bank lending unit Cox & Kings Financial Services, and related entity Ezeego One Travel and Tours, which have total loans of ₹1,862 crore, as wilful defaulters.
The classification was made in the June quarter and subsequently updated on Yes Bank’s existing list of such defaulters, according to data from credit information bureau TransUnion Cibil.
Yes Bank has an outstanding exposure of ₹519.44 crore to Cox & Kings, while it is ₹944.24 crore and ₹398.37 crore to Ezeego One Travel and Cox & Kings Financial Services, respectively.
A borrower is tagged as a wilful defaulter for failing to meet repayment obligations despite having the capacity to repay. Other reasons include not utilizing the loan for the specific purpose for which it was taken and diverting it for other purposes.
Under current regulations, wilful defaulters are not allowed to raise funds from banks and other financial institutions to start a new business for five years.
The government also enacted the Fugitive Economic Offenders Act, 2018, to allow confiscation of the property of fugitive offenders.
Once a well-known travel and tourism company, Cox & Kings is in the midst of ongoing investigations into alleged money-laundering linked to Yes Bank’s former promoter Rana Kapoor.
In June, the Enforcement Directorate (ED) searched the offices of Cox & Kings, the residences of key officials, including promoter Ajay Ajit Peter Kerkar, independent director Pesi Patel, chief financial officer Abhishek Goenka, and auditor Anil Khandelwal and Naresh Jain of the Cox & Kings Group in Mumbai. Last week, the ED arrested Khandelwal and Jain under the Prevention of Money Laundering Act.
The Economic Times reported on 3 October that Kotak Mahindra Bank has filed a case against Cox & Kings with the Economic Offences Wing of the Mumbai Police, alleging fraud.
Wilful defaults are taken very seriously by the Reserve Bank of India (RBI) as it clearly shows diversion of funds and unlike other cases of bad loans is not related to extraneous events.
N.S. Vishwanathan, former deputy governor, RBI, said in a speech in 2018 that for borrowers who have the ability but no willingness to repay, change in ownership accompanied by punitive action is the way to go.
The RBI has mandated banks to submit a list of suit-filed accounts and non-suit filed accounts of wilful defaulters of ₹25 lakh or more at least every month to credit information firms.
The evidence of wilful default is examined by a committee of high-ranking bank executives.
If the committee concludes that there is wilful default, it issues a show-cause notice to the borrower, and after considering the submissions, issues an order that is reviewed by another panel comprising the managing director or the chief executive, and two independent directors. The order becomes final only after it is confirmed by the review committee.