RBI finally discloses list of large Wilful defaulters

Four years after the Supreme Court first directed the Reserve Bank of India (RBI) to disclose a list of India’s wilful defaulters, the central bank has finally complied.

In response to a Right to Information (RTI) application filed by The Wire in May 2019, the RBI has released a list of 30 major wilful defaulters.

For over ten years, the RBI has denied RTI applicants this information arguing that it would be against the economic interests of the country and its ‘fiduciary relationship’ with the banks disallows it from doing so.

While the Central bank has been reluctant to release this data, individual banks and lenders have always generated information on wilful defaulters in the form of suits filed for recovery of their dues. This data has, over the years, been collated by TransUnion Cibil.

According to the Central bank’s response though, three companies belonging to fugitive diamantaire Mehul Choksi are amongst the 30 major wilful defaulters that the Indian banking system is currently grappling with.

Total funded advances outstanding to these 30 companies – along with the amount the banks have written off so far – adds up to over Rs 50,000 crore.

To put this in perspective, as of December 2018, over 11,000 companies had willfully defaulted on amounts worth over Rs 1.61 lakh crore, according to TransUnion Cibil data.

The wilful defaulter data released by the RBI comes from a large centralised banking system database called ‘CRILC’ – the Central Repository of Information on Large Credits. This is a pool of data on the credit information of all borrowers who have an exposure of Rs 5 crore and above. CRILC has in the last three years been particularly useful as a data-sharing mechanism between banks as well, to identify errant borrowers and ensure they don’t try to cheat the system.

From February 2019, banks have had the option in CRILC to categorise whether a borrower is a wilful defaulter or not.

The RBI defines a borrower as a ‘wilful defaulter’ if the company has not met repayment obligations despite having the capacity to do so. While a ‘wilful default’ tag does not necessarily imply wrong-doing on the part of the promoters, the classification is also used while referring to loan fraud cases, where the borrower has diverted the loan for purposes other than those initially stated.

The table below, therefore, is a list of borrowers flagged as ‘wilful defaulters’ by banks. The amounts of money given in the table is the sum of ‘funded advances outstanding’ and amount ‘prudentially/technical written-off’ as on April 30, 2019.

The data does not contain total bad loans or non-performing assets of these wilful defaulter accounts.

Borrowers flagged as wilful default and reported by banks under CRILC reporting as on April 30 2019.

Name and Amount (Rs. in Cr)

Many of the names on the list are well known – Gitanjali Gems, Rotomac Global, Zoom Developers, Deccan Chronicle Holdings, Winsome Diamonds, REI Agro, Siddhi Vinayak Logistics and Kudos Chemie. All these companies, or their promoters, have been slapped with cases by either the Central Bureau of Investigation or the Enforcement Directorate over the past five years.

Some of these firms also allegedly appeared on the list that former RBI governor Raghuram Rajan gave to the Prime Minister’s Office. This list was given as part of an appeal by Rajan for quicker action to be taken by India’s probe agencies.

While very few of these investigations have reached their logical conclusion yet, the agencies have filed chargesheets for some and attached assets as part of the loan recovery process in others. #casansaar (Source - PTI, Wire, Business Standard)