Revealed: Lending help to 50 top wilful defaulters

Indian banks technically write off a staggering amount of  68,607 crore dues of 50 top wilful defaulters, including absconding diamantaire Mehul Choksi. Bharat Hiteshi delves into an RTI reply by RBI

RTI activist Saket Gokhale had filed an RTI query seeking details of the 50 top wilful defaulters and the latest status of their loans till February 16. Mumbai native Saket Gokhale, an RTI activist who over the past two years, has reportedly filed over 45 RTIs.

Topping the list is Choksi’s scam-hit company, Gitanjali Gems Limited, which owed 5,492 crore. The list also includes Baba Ramdev and Balkrishna’s group company Ruchi Soya Industries Ltd., Indore (2,212 crore), and Zoom Developers Pvt. Ltd., Gwalior (2,012 crore), liquor baron Vijay Mallya’s defunct Kingfisher Airlines Ltd. (1,943 crore).

In all outstanding loans amounting to 68,607 crores of top 50 willful bank loan defaulters in the country including firms of Mehul Choksi and Vijay Mallya have been technically written off till September 30, 2019, the Reserve Bank of India said in an RTI reply. Choksi’s company Gitanjali Gems tops the list of these defaulters with a whopping amount of 5,492 crores, according to the list. Choksi’s other firms Gili India and Nakshatra Brands also have loans of 1,447 and 1109 crore respectively written off.

This is followed by REI Agro with 4,314 crores and Winsome Diamonds with 4,076 crores. Rotomac Global Private Limited has funded advances of 2,850 crores which have been technically written off. REI Agro of Jhunjhunwala brothers is already under the scanner of Enforcement Directorate. The CBI and ED are also probing alleged fraud by the owners of Winsome Diamonds. Vikram Kothari’s Rotomac is the fourth in the list. He and his son Rahul Kothari were arrested by the CBI for bank loan default.

Other defaulters now technically written off include, Ruchi Soya Industries Limited, now owned by Ramdev’s Patanjali, with 2,212 crores, Kudos Chemie Ltd with 2,326 crores and Zoom Developers Pvt Ltd with 2,012 crores.

Mallya’s Kingfisher Airlines figures in the list at number 9, with outstanding amount of 1,943 crores which have been technically written off by the banks. Forever Precious Jewellery and Diamonds Private Limited has loans of 1,962 crores written off while Deccan Chronicle Holdings Limited have 1915 crores written off loans.

“The information on top 50 wilful defaulters and their sum of funded amount outstanding and amount technically/prudentially written off as on September 30, 2019 reported in CRILC by banks, is provided,” the RBI said in its written response dated April 24.  In his application, RTI activist Saket Gokhale had sought the list of defaulters as on February 16, but the RBI said the requested information is not available.

The RBI said that according to section 8 (1)(a) of RTI Act 2005 read with para 77 of Supreme Court judgement of December 16, 2015 in Jayantilal N Mistry case, information on overseas borrowers is exempted from public disclosure.

“Data is as reported by banks and RBI will not be held responsibly or accountable for any misreporting and/or incorrect reporting by the reporting entities,” the RBI said in the written reply to the RTI query.

Later in a series of tweets, Union Finance Minister Nirmala Sitharaman accused Congress leader Rahul Gandhi and Congress spokesperson Randeep Singh Surjewala of “misleading people in a brazen manner by sensationalising facts’’ and asked them to consult former PM Manmohan Singh on finance-related issues.

Surjewala hit back by accusing Sitharaman of twisting facts and posed a list of questions that he wanted the Centre to answer. Surjewala wanted to know why the Modi government had written off bank loans worth 6.6 lakh crore since it came to power. He also sought an answer on whether the RBI’s RTI reply dated April 24 of loans write-off of 68,607 crore was wrong or right.

Responding to Sitharaman’s assertion that the Modi government was cleaning up the mess left behind by the UPA government, Surjewala said, “Cleaning the banks of people’s money by writing off loans of absconders and fraudsters is not called ‘cleaning the system’. It’s called weakening the entire bank architecture fiscally and imprudently, if not maliciously.’’

The Finance Minister sought to counter the Congress leaders on the same grounds by counter-accusing the UPA government of writing off 1.45 lakh crore in bad bank loans between 2009-10 and 2013-14. She then dissected the cases of fugitives Nirav Modi, Mehul Choksi and Vijay Mallya, which include nearly 10,000 recovery suits and over 3,500 FIRs that have yielded 18,332.7 crore in attachment and seizures from the trio. Sitharaman wanted the Congress and Gandhi should introspect why they fail to play a constructive role in cleaning up the system. “Neither while in power, nor while in the opposition has the Congress shown any commitment or inclination to stop corruption and cronyism,’’ she posted.

Anurag Singh Thakur, Minister of State for Finance & Corporate Affairs in a written reply to a question in Rajya Sabha had earlier confirmed that primarily as a result of transparent recognition of stressed assets as NPAs, gross NPAs of nationalised banks, as per RBI data on global operations, rose from 1,92,809 crore as on 31.3.2015, to 6,16,586 crore as on 31.3.2018, and as a result of Government’s 4R’s strategy of recognition, resolution, recapitalisation and reforms, have since declined by 49,795 crore to 

 5,66,791 crore as on 31.3.2019 (provisional data). As per RBI norms and policy approved by bank Boards, non-performing loans, including, inter-alia, those in respect of which full provisioning has been made on completion of four years, are removed from the balance-sheet of the bank concerned by way of write-off. Banks themselves write-off NPAs as part of their regular exercise to clean up their balance-sheet, tax benefit and capital optimisation, in accordance with RBI guidelines and policy approved by their Boards. As borrowers of written-off loans continue to be liable for repayment and the process of recovery of dues from the borrower in written-off loan accounts continues, write-off does not benefit the borrower. Bank-wise details of amount written-off by banks during the last three financial years are at Annex.

Saket Gokhale observed that a majority of them have defaulted prominent nationalist banks over the past several years and many of them are either absconding or facing action by various probe agencies and some are under litigation.

Significantly, the amount of 68,607 crores is almost, 8 times the amount India has borrowed from the World Bank for fighting Covid-19 or 30 per cent of India’s Covid-19 stimulus package or equal to 45 crore Covid-19 testing kits, tweeted Saket Gokhale on April 27.

Reduction In Npas due to write-offs (including compromise)                                                   Amounts in crore Rs

Nationalised Bank                         FY 2016-17               FY 2017-18             FY 2018-19

Allahabad Bank                                  2,442                         3,635                       4,219

Andhra Bank                                        1,623                         1,666                       2,280

Bank of Baroda                                   4,348                        4,948                      13,102

Bank of India                                       7,346                         8,976                       7,405

Bank of Maharashtra                          1,374                         2,460                       5,127

Canara Bank                                        5,545                         8,310                      14,267

Central Bank of India                         2,396                         2,924                      10,375

Corporation Bank                                3,574                         8,228                      5,989

Dena Bank                                              833                            661                        4,672

Indian Bank                                           437                          1,606                       2,872

Indian Overseas Bank                       3,066                        6,908                       7,794

Oriental Bank of Commerce             2,308                         6,357                       6,457

Punjab and Sind Bank                         491                            460                        1,635

Punjab National Bank                        9,205                         7,407                      12,253

Syndicate Bank                                    1,271                         2,400                       6,775

UCO Bank                                              1,937                         2,735                       4,420

Union Bank of India                            1,264                         3,477                        7,771

United Bank of India                            714                           1,867                       5,365

Vijaya Bank                                         1,068                        1,539                       1,518