Passport details of borrowers taking loans of Rs 500 million (Rs 50 crore) and more have been made mandatory to ensure swift action in case of fraud and to prevent fraudsters from fleeing the country, a top official said on Saturday.
The passport details will help banks to take timely action and inform the relevant authorities to prevent fraudsters from fleeing the country.
"Next step on clean and responsible banking. Passport details must for loans above Rs 500 million (Rs 50 crore). Step to ensure quick response in case of fraud," Financial Services Secretary Rajiv Kumar tweeted.
This is a preventive step to avoid the flight of economic offenders, said Kumar, adding that banks were to collect passport details of all new borrowers of loans in excess of Rs 500 million (Rs 50 crore).
For all existing loans of over Rs 500 million (Rs 50 crore), banks have been asked to collect passport details of borrowers within 45 days, he added.
In the absence of passport details, banks were hamstrung in taking timely action to prevent defaulters, especially wilful ones, from fleeing the country.
Last week, the Cabinet approved the Fugitive Economic Offenders Bill after Nirav Modi and his uncle Mehul Choksi allegedly defrauded state-owned Punjab National Bank (PNB) of Rs 127 billion (Rs 12,700 crore) and left the country. Modi and Choksi are refusing to cooperate with law enforcement agencies.
The proposed fugitive law aims to impound and sell assets of Nirav Modi-type escapees with a view to quickly recover dues. It will also apply to defaulters who have an outstanding of Rs 1 billion (Rs 100 crore) or more and have escaped from the country.
As part of a drive to clean the banking system, the Finance Ministry last week had directed public sector banks (PSBs) to probe all NPA accounts of over Rs 500 million (Rs 50 crore) for possible fraud and, accordingly, report the cases to the CBI.
Besides, the ministry had asked banks to monitor loans above Rs 2.5 billion (Rs 250 crore) and raise a red flag whenever the original covenants of the loans are violated. This was spelt out as part of a six-point reform measure announced for PSBs in January.
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