Banks’ wilful defaults spike 45% in a year to cross Rs1 lakh crore

The number of wilful defaulters who have the resources to pay but refuse to do so is on the rise - local lenders have seen a nearly 45 per cent spike of Rs34,900 crore in wilful defaults from last year, reports The Indian Express, quoting a report by the TransUnion CIBIL, a credit information firm.

According to the report, the wilful defaults jumped to Rs1,09,594 crore in March 2017 from Rs74,694 crore in the previous year.

Over the last five years, wilful defaults have risen by over Rs84,000 crore. In FY16, wilful defaulters rose 31 per cent while in 2015, it grew 47.5 per cent, according to the report.

The State Bank of India topped the default list with Rs15,069 crore stuck in 997 accounts. In FY17, this amount grew by Rs2,759 crore. Punjab National Bank and Bank of Baroda are next in the list with Rs10,989 and Rs4,785 crore worth defaults, respectively.

In SBI, the default account includes accounts of GET Engineering with default of Rs424 crore and Zenith Birla with Rs139 crore. PNB has put the accounts of Zoom Developers with Rs410 crore defaults, Forever Precious (Rs747 crore) and Winsom Diamond with Rs899 crore, on the default list.

On the other hand, wilful defaults with the Life Insurance Corp of India (LIC) reduced to Rs1,034 crore in March 2017 from Rs1,304 crore in the same period last year.

All India Bank Employees Association General Secretary CH Venkatachalam told Indian Express that such wilful defaults should be declared a criminal offence and action must be taken against the defaulters.

''There has been a rise in wilful defaults. Banks categorise borrowers who have the capacity to repay or those who siphoned off funds as wilful defaulters. These are mostly legacy accounts,'' the senior official of a leading public sector bank told IE.

A wilful default is defined by the Reserve Bank of India as one where the borrower has defaulted in meeting its payment / repayment obligations to the lender when it has the capacity to honour these commitments. It also includes those that have siphoned off or not utilised funds for / from the specific purposes for which finance was availed of, and those that have disposed of or removed movable fixed assets or immovable property given for the purpose of securing a term loan.