Finance Minister informed the Lower House that public sector banks (PSBs) had filed suits for recovery from defaulters in 8,121 cases till March 31, 2019.
SEBI has debarred wilful defaulters and companies with wilful defaulters, from accessing capital markets to raise funds
- Finance Minister Nirmala Sitharaman stated the total number of wilful defaulters stood at 8,582 at the end of FY19, against 5,349 at the end of FY15.
- A wilful defaulter is the one who has the resources to repay the loan, but does not do so intentionally and deploys the money for purposes other than intended.
- Also, it is the one who doesn’t utilize the loan for the specific purpose for which it was availed of but was instead diverted for other purposes.
- The number of wilful defaulters has risen 60 percent in the five years up to FY19, but over ₹7,600 crore has been recovered from these defaulters.
Wilful defaulters are not sanctioned additional facilities by banks or financial institutions, and their entities are debarred from floating new ventures for five years.
The RBI has mandated banks to submit a list of suit-filed accounts and non-suit filed accounts of willful defaulters of ₹25 lakh and above on a monthly or more frequent basis to credit information companies like Cibil.
The evidence of willful default is examined by a committee headed by an executive director and two other senior officers of the rank of the general manager or deputy general manager. If the committee concludes that willful default has occurred, it issues show-cause notice to the borrower and calls for their submissions and after considering their submissions, issues an order on willful default and the reasons.