Suits Against Wilful Defaulters Rose By 507 In Last Fiscal

The number of suits filed by banks and financial institutions (FIs) against wilful defaulters has jumped by 507 in fiscal 2000-01 alone, the Reserve Bank of India (RBI) has reported quoting figures submitted by banks.

According to the central bank, the number of cases filed by banks and institutions against wilful default in 1999-2000 was 204, which jumped to 711 in 2000-01.

What more, the number is expected to go up if the RBI accepts the S S Kohli panel report, which has recommended that bankers and FIs be allowed to make public the names of parties which have defaulted on loans, but against whom suits were yet to be filed.

 

At present, banks and FIs are only allowed to make public the names of companies that have defaulted, but only after suits have been filed against them in a court of law.

India Inc is not happy with the move as banks can use this as pressure tactic to force defaulting companies pay back the loans, said sources.

The number of cases filed by the State Bank of India against wilful defaulters' increased nearly three fold to 104 in 2000-01 against a small 39 in 1999-2000.

Wilful defaulters in the case of the Kolkata-based Allahabad Bank did not, however, rise much, with just nine suits in 2000-01. The total amount of new NPAs thus formed stands at Rs 14.35 crore.

The number at Bank of Baroda rose to 24 in 2000-01 from less than half a dozen in 1999-2000. Meanwhile, IFCI remains the largest loser with bad loans totalling a mammoth Rs 119.75 crore.

This was followed by Rs 108.47 crore worth of loans made by the Export-Import Bank of India. One finance company has emerged as one of the largest wilful defaulters for a loan advanced by Bank of India at Rs 64.93 crore. One mineral and smelting company has also defaulted on a loan of Rs 63.73 crore made by State Bank of Patiala, while a steel manufacturer has defaulted on a loan of Rs 45.84 crore received from the State Bank of Travancore, a subsidiary of SBI.

The weak banks, however, have been lucky in terms of new cases of default. Only three loans issued by Indian Bank and United Bank of India each went into default. The total amount loaned was Rs 2 crore and Rs 10 crore, respectively. One company defaulted in paying back its loan to UCO Bank of Rs 3 lakh.