🔥 Premium AI-powered Stock Picks from InvestingPro Now up to 50% OffCLAIM SALE

Wilful defaults in Indian banks rise, new measures proposed

EditorPollock Mondal
Published 2023/10/17, 10:14
© Reuters.
NSEBANK
-
ABB
-
ABAN
-
CESC
-
ELST
-
GTGM
-
GTLI
-
GTL
-
JSTL
-
JNSP
-
SBI
-
TISC
-
ABOT
-
ALLA
-
HGSL
-
ABML
-
GRSE
-

In an effort to address the escalating issue of willful defaults, the Reserve Bank of India (RBI) has proposed new provisions, including compromise settlements for wilful defaulters, according to the RBI's Draft Master Direction. This move comes as data from TransUnion (NYSE:TRU) Cibil reveals a significant surge in wilful defaults in Indian banks. As of March 2023, these defaults had increased to Rs 353,874 crore (Rs 1 crore = $120,127) across 16,883 accounts.

Nationalised banks and the State Bank of India (SBI) accounted for 77% of these defaults. The major contributors include SBI with Rs 79,271 crore, Punjab National Bank with Rs 41,353 crore, and Union Bank with Rs 35,623 crore. Legal actions are currently underway against 36,150 Non-Performing Asset (NPA) accounts to recover Rs 926,000 crore.

The top 50 wilful defaulters owe Rs 87,295 crore to banks and financial institutions. The list of major defaulters includes Gitanjali Gems Limited, ABG Shipyard Limited, and Concast Steel and Power Limited.

In response to this situation, a Supreme Court order mandates lenders to offer borrowers an opportunity to represent themselves before declaring an account as fraudulent. This is in line with the Finance Ministry's report stating that the top 50 wilful defaulters owe Rs 87,295 crore to banks and financial institutions.

The RBI's provisional data also reveals that scheduled commercial banks have written off an aggregate amount of Rs 10,57,326 crore over the last five years. This information underscores the severity of the issue and highlights the need for proactive measures to mitigate wilful defaults.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.