An internal audit by the Central Bank of India has found that the promoter of Winsome Diamonds and Jewellery — the country’s top wilfully defaulting company of public sector bank loans — may have shifted abroad.
The audit note on Winsome says, “The promoter/director of the group is reported to have shifted abroad and not responding to bank calls. This account has caused serious setback to our bank as huge provisions had to be made under IRAC norms… Our bank is not having sufficient security to fall back upon.”
IRAC (Income-Recognition, Asset-Classification) is a process of managing non-performing assets (NPAs) and conducting recovery proceedings.
A wilful defaulter is one who has defaulted in meeting its payment or repayment obligations to the lender even when it has the capacity to pay.
Diamond trader Winsome had taken total loans of Rs 4,276 crore from 11 banks, including Rs 711 crore from Central Bank.
The Central Bank loan was termed NPA or a bad loan on June 30, 2013.
Central Bank did not respond to HT’s queries.
In April, HT had reported on how the company was named the top bank loan fraudster by Reserve Bank of India (RBI) governor Raghuram Rajan in a letter to the Prime Minister’s Office seeking urgent action on large-value banking frauds and “the need to take concerted action in these cases”.
Rajan’s letter also stated that the Economic Offences Wing had refused to entertain a complaint by lending consortium leader Standard Chartered Bank, saying no cognisable offence was sighted.
“One bank has filed the complaint and is under investigation,” the Central Bureau of Investigation said.
In 2014, Central Bank had gross NPAs amounting to Rs 11,500 crore, of which Rs 1,995 crore had been written off or compromise settlements reached.
In 2013, public sector banks accounted for about 73% of total assets in the Indian banking industry, while private banks had 21% and foreign banks about 6%. But the share of public sector banks in gross NPAs stood at 85% the same year, up from 75% in 2003.
On the contrary, NPAs in private sector banks fell from 14% in 2003 to 8% in 2013.