Wilful Defaulter Dues Rose by a Whopping Rs 100 Crore Per Day Since March 2019: Report

New Delhi: The outstanding amount due from wilful defaulters has risen at a pace of over Rs 100 crore daily since March 2019, Business Standard reports, meaning the amount due from wilful defaulters has risen by at least Rs 1.2 trillion – or Rs 1.2 lakh crore – since then.

The total amount due has risen more than 50% to Rs 3 trillion as of June 2023.

A wilful defaulter is a specific term used for borrowers who, despite having the ability to do so, do not pay back a loan. It does not refer to small borrowers like a farmer in distress.

This massive rise of Rs 100 crore a day since March 2019 severely dents the claim by Prime Minister Narendra Modi on July 22 that the previous UPA government had "destroyed" the banking sector with "scams", while his dispensation has restored its "good financial health", as per The Hindu.

The Business Standard report is based on data from TransUnion CIBIL. “The data is updated by various financial institutions with varying frequency. The figures reflect the latest available numbers,” writes the newspaper, It cautions that this might be an underestimate. “The amount may be larger since at least one nationalised bank and one private sector bank have not reported June numbers yet. The overall amount has remained over the Rs 3 trillion mark for at least four quarters in a row,” it adds.

The Reserve Bank of India (RBI) recently proposed that wilful defaulters must be declared as such within six months of the loan becoming a non-performing asset (NPA). The central bank has asked for public comments on the proposal by October-end.

Private sector banks and other financial institutions have seen a small increase in their share of such loans (which are not being returned), but public banks, worryingly, account for the largest losses.

Their share in money owed by wilful defaulters was 77.5% in June 2023

Wilful defaulters owe ten nationalised banks another Rs 1.5 lakh crore, of which the State Bank of India is owed Rs 80,000 crore as of June. The private sector banks' outstanding amount is Rs 53,500 crore in all.

'Suit Boot ki Sarkar' and charges of cronyism

The Union government has been under pressure since RTI replies, parliamentary questions and bank data have revealed the massive amounts of public money owed by big borrowers.

India’s worsening performance in the Crony Capitalism Index has added grist to the Opposition campaign of ‘suit-boot ki sarkar’, shorthand for a government for cronies, which Congress leader Rahul Gandhi popularised after the Modi government presented the controversial Land Bill in 2015 that it was forced to withdraw.

India ranks at number 10 on The Economist’s ‘crony capitalism’ index. Since 2013, wealth from "crony-capitalist sectors" in India rose from 5% to 8% of its GDP as per the index.

A written reply to the Rajya Sabha by the minister of state for finance Bhagwat Karad in this year's monsoon session created a furore when he revealed that scheduled commercial banks “have written off an aggregate amount of Rs 10,57,326 crore during the last five financial years (RBI provisional data for FY 2022-23).”

He said that the top ten wilful defaulters owe Rs 40,825 crore to scheduled commercial banks.

India's top 50 loan defaulters owe Rs 87,295 crore to banks and financial institutions, according to the Union finance ministry. Fugitive Mehul Choksi's Gitanjali Gems is the biggest wilful defaulter, owing Rs 8,738 crore to banks, followed by Era Infra Engineering Limited owing Rs 5,750 crore, REI Agro Limited Rs 5,148 crore, ABG Shipyard Limited Rs 4,774 crore, and Concast Steel and Power Limited Rs 3,911 crore. Wilful default cases have been on the rise, as banks have filed suits against 36,150 NPA accounts to recover Rs 9.26 lakh crore in FY23, as per a Business Today report this month.

The relationship of public money with this government has come under scrutiny earlier too, when a controversy broke over the Adani Group after a report released by Hindenburg Research revealed alleged irregularities. Charges were made of LIC being asked to buy into Adani, despite a 60% drop in market values of their shares. LIC denied charges. The Adani Group too has consistently denied all allegations.

State-wise: Maharashtra and Delhi

Maharashtra has seen the largest absolute increase in wilful defaults since March 2019, as per the report.

Maharashtra, Delhi, West Bengal, Gujarat and Tamil Nadu are the top five states for wilful defaulter loans. They make up over 70% of the amount due (until the end of the previous financial year).

The total amount outstanding rose from Rs 0.6 trillion to Rs 1.3 trillion during this time.

There was a 200% increase to Rs 0.6 trillion between March 2019 and March 2023, compared to 95% across all places in Delhi. So the fastest rise was in the national capital.

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