It’ll be tough for wilful defaulters | india | Hindustan Times
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It’ll be tough for wilful defaulters

india Updated: Aug 21, 2012 22:36 IST
Mahua Venkatesh
Mahua Venkatesh
Hindustan Times
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Banks have decided to get tough with wilful defaulters or borrowers who have not repaid bank loans despite having the capacity to do so.

Saddled with rising bad debts, banks are pressing for imposition of stricter penalties, including a ban of up to five years on floating of new ventures by the promoters of such firms. Besides promoters, auditors, if found to have wrongly presented facts about borrowing companies, will be held accountable.

According to the Reserve Bank of India, any entity that defaults on payments of loans worth more than R25 lakh despite having the repayment capacity can be considered as anhttp://www.hindustantimes.com/Images/Popup/2012/8/22-08-12-biz-02.jpg wilful defaulter.

Nearly R56,000 crore of funds — more than the government’s budgeted expense on its rural job guarantee scheme NREGA — are locked up with individuals and firms who have “wilfully” decided not to payback loans that they had raised despite having the income and resources to repay.

Worse, some to them have even disposed off assets and properties pledged against the loan without informing the banks.

Banks therefore are planning to make the names of such defaulters public.

“It has also been decided to make the debt recovery tribunals more effective,” a chairman of a public sector bank told HT on the condition of anonymity. “At present, they exist but are not very effective in their operations.”

“Banks should not support wilful defaulters,” Arun Kaul, chairman and managing director, UCO Bank told HT. “This measure would put pressure on everybody to become more disciplined.”

Last week, finance minister P Chidambaram, in a review meeting, asked chairmen of the state-owned banks to exert themselves in containing the rise in bad loans by devising “suitable strategies.”