Home / Industry / Banking /  SBI, PNB, ICICI, HDFC among 8 top banks witnessing wilful defaults surge

Eight of India’s biggest banks have seen a significant jump in wilful defaults in the six months to September, with such loans rising by over 37,000 crore to 1.5 trillion, shows data on suit-filed accounts from credit bureau TransUnion Cibil.

These banks—State Bank of India, Punjab National Bank, Bank of Baroda, Bank of India, Union Bank of India, ICICI Bank, HDFC Bank and Axis Bank—account for 75% of all loans reported as wilful defaults as of 30 September.

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In the same period last year, the increase was about 10,000 crore.

The merger of some state-run banks on 1 April naturally led to the anchor banks taking over wilful defaulters on their books. But this is not the only space where wilful defaults have risen.

For instance, SBI, not involved in any of the mergers, saw total wilful defaults rise by around 14,000 crore in the six months to September to 58,475 crore.

On 1 April, Punjab National Bank merged with Oriental Bank of Commerce (OBC) and United Bank of India, while Union Bank of India merged with Andhra Bank and Corporation Bank. Data showed the smaller banks—OBC, United Bank, Andhra Bank and Corporation Bank—had 21,837 crore of wilful defaults as of March. But even if that is discounted, wilful defaults are up 60% from a year ago in April-September.

ICICI Bank is the only outlier when seen on a standalone basis, with wilful defaults falling 0.2%, while HDFC Bank saw a 0.8% rise. The aggregate increase has largely come from a few public sector banks.

A wilful defaulter is a borrower who has defaulted on loans even when it has the capacity to pay or if it has not utilized the loan for the specific purposes for which finance was availed for and has diverted funds .

Although wilful defaults did not seem to ebb even before covid—despite the fear of bankruptcy proceedings—they have taken a turn for the worse since April. The Centre has restricted fresh cases under the Insolvency and Bankruptcy Code—first for six months till 25 September and then for another three months till 25 December.

Aiming to curb wilful defaults, the Centre asked public sector banks in 2019 to examine all accounts exceeding— 50 crore, if classified as non-performing and check for possible fraud.


Shayan Ghosh

Shayan Ghosh is a national writer at Mint reporting on traditional banks and shadow banks. He has over a decade of experience in financial journalism. Based in Mint’s Mumbai bureau since 2018, he tracks interest rate movements and its impact on companies and the broader economy. His interests also include the distressed debt market, especially as India’s bankruptcy law attempts recoveries of billions worth of toxic assets.
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