The List of Wilful Defaulters Increased by 60% in 5 Years

Highlights:

  1. The amount of wilful defaulters has risen by 60% in the previous 5 years till FY 2019, however over INR 7,600 crore has been recovered from defaulters.
  2. The Income Tax department has issued notices, under the Black Money Act, in over 380 cases that involve undisclosed foreign assets and income valued over 12,260 crore.
  3. Serious measures have been initiated in 6,251 cases involving secured assets under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

The amount of wilful defaulters has risen by 60% in the previous 5 years till FY 2019, however over INR 7,600 crore has been recovered from defaulters.

Finance Minister, Nirmala Sitharaman said that the total count of wilful defaulters stood at 8,582 at the end of FY 2019 as compared to 5,349 at the end of FY 2015.

Replying to questions, Sitharaman and Minister of State for Finance, Anurag Singh Thakur, defined a wilful defaulter is one who has potential resources to pay back the loan, but doesn’t repay intentionally and keeps or invests the money for purposes other than intended.

The Finance Minister informed the Lower House that public sector banks (PSBs), up to March 31, 2019, had already filed suits for recovery in 8,121 defaulter cases.  

Steps taken

Serious measures have been initiated in 6,251 cases involving secured assets under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. As per RBI instructions, FIRs have been reported in 2,915 cases.

Wilful defaulters are not permitted to use any of the facilities provided by banks or other financial institutions. Their entities are suspended from establishing new ventures for 5 years. SEBI has debarred individual wilful defaulters and companies with wilful defaulters from gaining access to capital markets in order to raise funds, said by the Finance Minister.

The Minister also said as an outcome of the government’s “4Rs” (Recognition, Resolution, Recapitalisation and Reforms) strategy, the gross NPAs of PSBs as per RBI data increased to INR 8.95 lakh crore at the end of March 2018 from 2.79 lakh crore at the end of March 2015. This had declined to INR 8.06 lakh crore at the end of March 2019.

PSBs have been able to recover about INR 3.59 lakh crore over the last four fiscal years (FY 2016-2019).

Black money

The Income Tax department has issued notices, under the Black Money Act, in over 380 cases that involve undisclosed foreign assets and income valued over 12,260 crore. Further, prosecution has been initiated in 68 cases. The tax department also investigated 983 groups and confiscated worth INR 1,584 crore in FY 19.

In FY 2018, 582 groups were investigated and about INR 1000 crore worth of seizures were made.

The amount of taxpayers under direct taxes rose to 8.44 crore for assessment year (AY) 2018-19 as compared to 7.42 crore for AY 2017-18

The net total of direct tax collection increased to INR 11.37 lakh crore in FY 19 as compared to INR 10.02 lakh crore in FY 18. PSBs managed to recover about INR 3.59 lakh crore from FY 2016 – 2019.

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  1. Number of wilful defaulters has surged 60% in 5 Years
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