State-owned banks in India face a growing problem of wilful loan defaults, where borrowers deliberately refuse to repay their loans. The issue extends far beyond the infamous case of Vijay Mallya, with 2,623 individuals now owing a staggering Rs 1.96 lakh crore (US$ 24.2 billion) to banks.
Among these defaulters, 10 individuals stand out for their exceptionally high debts, totaling over Rs 40,000 crore (US$ 4.9 billion). Mehul Choksi’s Gitanjali Gems Ltd tops this list, burdened with a monumental Rs 7,110 crore (US$ 877 million) debt.
Other notable defaulters include Era Infra Engineering Ltd (Rs 5,879 crore), REI Agro Ltd (Rs 4,803 crore), Concast Steel and Power Ltd, ABG Shipyard Ltd, Frost International Ltd, Winsome Diamonds & Jewellery, Rotomac Global Pvt Ltd, Coastal Projects Ltd, and Zoom Developers Pvt Ltd.
I would like to ask the finance minister what extra and special steps are being taken to deal with wilful defaulters.
— Congress (@INCIndia) December 5, 2023
2,623 individuals owe the banks, amounting to ₹1.96 lakh crores.
Would she consider naming and shaming them?
: @Jairam_Ramesh ji in Rajya Sabha pic.twitter.com/FNStQKTdq9
Congress leader Jairam Ramesh raised this alarming situation in the Rajya Sabha, questioning the government’s approach towards wilful defaulters. In response, Finance Minister Nirmala Sitharaman outlined various measures taken by banks, including:
- Legal suits filed against 13,978 accounts
- Initiation of 11,483 SARFAESI cases (Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest)
- Filing of FIRs in 5,674 cases
- Recovery of Rs 33,801 crore (US$ 4.1 billion) in aggregate
Despite these efforts, the sheer scale of the problem remains a major challenge for the Indian banking system. Addressing this issue effectively will require a multi-pronged approach, including stricter regulations, improved credit risk assessment, and more effective legal action against wilful defaulters.
