Dues skyrocketing by Rs 100 cr per day since 2019 in Indian banks vs wilful defaulters battle

The cumulative amount owed by these borrowers has ballooned by at least Rs 1.2 trillion, or Rs 1.2 lakh crore, since 2019

Fugitive businessmen Mehul Choksi (left) & Nirav Modi (NH Photo)
Fugitive businessmen Mehul Choksi (left) & Nirav Modi (NH Photo)

NH Economic Bureau

The total outstanding dues from wilful defaulters in India have surged by a staggering Rs 100 crore per day since March 2019, as reported by Business Standard, based on data from TransUnion CIBIL. This alarming increase means that the cumulative amount owed by these borrowers has ballooned by at least Rs 1.2 trillion, or Rs 1.2 lakh crore, over this period. The total amount owed by wilful defaulters has now crossed the Rs 3 trillion mark as of June 2023, an increase of more than 50 per cent.

This revelation contradicts the claims made by Prime Minister Narendra Modi in July 2023, asserting that his government had restored the "good financial health" of the banking sector. According to The Hindu, the PM accused the previous UPA government of "destroying" the banking sector with "scams". However, the significant surge in wilful defaulter dues goes against this narrative.

A Business Standard news report highlights that while the figures are already substantial, they may be underestimated as at least one nationalised bank and one private sector bank are yet to report their June numbers. The total outstanding amount has consistently remained above the Rs 3 trillion mark for at least four consecutive quarters, indicating a persistent and concerning issue.

The Reserve Bank of India (RBI) recently proposed a stricter approach to dealing with wilful defaulters, suggesting that such defaulters must be declared as such within six months of their loans becoming non-performing assets (NPAs). The RBI has solicited public comments on this proposal until the end of October, indicating a potential shift in regulatory measures.

The report also sheds light on the distribution of wilful defaulter dues among different types of banks. Private sector banks and other financial institutions have seen a slight increase in their share of non-recoverable loans. In contrast, public sector banks bear the brunt of the losses, accounting for a substantial 77.5 per cent share of the total amount owed by wilful defaulters as of June 2023.

Further analysis of the data reveals that wilful defaulters owe 10 nationalised banks an additional Rs 1.5 lakh crore, with State Bank of India, the largest creditor, owed a staggering Rs 80,000 crore as of June. Private sector banks, on the other hand, are grappling with an outstanding amount of Rs 53,500 crore.

The Union government has faced increasing pressure due to revelations through RTI replies, parliamentary questions, and bank data that have exposed the massive amounts of public money owed by prominent borrowers. India's declining performance on The Economist's 'crony capitalism' index, ranking at number 10, has added momentum to the Opposition's 'suit-boot ki sarkar' campaign, which characterises the government as favouring cronies.

In a written reply to the Rajya Sabha, minister of state for finance Bhagwat Kara, disclosed that scheduled commercial banks had "written off an aggregate amount of Rs 10,57,326 crore during the last five financial years (RBI provisional data for FY 2022-23)". This raises serious concerns about the fiscal discipline in the banking sector.

According to the Union finance ministry, India's top 50 loan defaulters owe Rs 87,295 crore to banks and financial institutions. Notably, fugitive Mehul Choksi's Gitanjali Gems tops the list as the biggest wilful defaulter, with dues amounting to Rs 8,738 crore, followed by Era Infra Engineering Limited, REI Agro Limited, ABG Shipyard Limited, and Concast Steel and Power Limited, all with substantial outstanding amounts.

Additionally, wilful default cases have increased, with banks initiating suits against 36,150 NPA accounts to recover a colossal sum of Rs 9.26 lakh crore in the fiscal year 2023, as reported by Business Today.

The report also highlights the regional disparities in wilful default cases. Maharashtra has witnessed the largest absolute increase in such defaults since March 2019. The top five states for wilful defaulter loans are Maharashtra, Delhi, West Bengal, Gujarat, and Tamil Nadu, collectively accounting for over 70 per cent of the total outstanding dues. During this period, the total amount owed in these states has surged from Rs 0.6 trillion to Rs 1.3 trillion.

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