The government and the Reserve Bank of India (RBI) have asked banks to swiftly declare names of other wilful defaulters besides Vijay Mallya-promoted Kingfisher Airlines.
United Bank of India recently declared Kingfisher Airlines, Vijay Mallya and three directors on board wilful defaulters. State Bank of India has also sent a notice to tag them wilful defaulters. "We have already sent a notice to KFA (to declare it as wilful defaulter). There is a mandatory time that needs to be given to them to respond and that time is currently on," SBI chairperson Arundhati Bhattacharya had said.
"Banks cannot be keep on giving time to the wilful defaulters, they need to act swiftly," a senior finance ministry official said.
Banks, which have witnessed a surge in the level of non-performing assets (NPAs) - loans that do not yield returns - have also been asked to aggressively adopt the name and shame policy to make public the list of wilful defaulters.
In a notification issued on Tuesday, the RBI also said that guarantors, who refuse to fulfil their obligations to banks despite having adequate resources, will also be treated as wilful defaulters.
Besides UBI and SBI, another lender to the Kingfisher, Punjab National Bank, is also in the process of doing the same.
"NPAs have increased as the economy of the country has slowed down in the last two years… Besides, there are many people whose intentions are not good... they do not want to repay the loans," finance minister Arun Jaitley said last month.
The NPA level in government banks rose to 4.72%, or Rs 2,16,729 crore, as on March 2014 against 3.84% in year-ago period.
The finance ministry is also looking to amend the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 to ensure timely closures of cases and reduce the level bad assets.