Page 54 - Banking Finance January 2025

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Wilful defaults: RBI reveals top 100;

2,664 corporates owe Rs. 1.96 lakh cr

A staggering 2,664 corporates have been classified as During the audit it was alleged that the top management
wilful defaulters, failing to repay bank loans despite
of the company was involved in diversion of funds causing
having the means to do so, according to the Reserve
criminal breach of trust with an intent to use the banks funds
Bank of India (RBI). As of March 2024, these
defaulters owed Rs 1,96,441 crore to the banking system, for personal gains possibly to tax havens.
Promoted by Rishi Agarwal and a major player in the
raising concerns about the financial health of India's corporate shipbuilding sector, ABG Shipyard owed Rs 4,684 crore. During
sector and the potential risks to the banking system. an audit by E&Y as mandated by SBI, it was allegedly found
Replying to the Right to Information (RTI) queries filed by that the top management of the company was involved in
The Indian Express, the RBI named the top 100 corporate diversion of funds for personal gains. Agarwal was arrested
defaulters (excluding individuals and foreign borrowers) with by Central Bureau of Investigation (CBI) in September 2022.
Gitanjali Gems Ltd topping the list with a wilful default of Third in the defaulters' list, Concast Steel and Power owed
Rs 8,516 crore as of June 2024. Rs 4,305 crore to banks, according to the RBI. The
The number of wilful defaulters had gone up from 2,154 in Enforcement Directorate (ED) earlier this week arrested
March 2020 to 2,664 in March 2024 and the amount they industrialist and owner of Concast Steel and Power Sanjay
owed rose from Rs 1,52,860 crore to Rs 1,96,441 crore in Sureka in connection with the bank fraud case. Jewellery
the last four years, as per the RBI data. worth Rs 4.5 crore and several foreign-made luxury cars
were seized during raids at properties linked to him.
The actual default and other liabilities claimed before the
National Company Law Tribunal (NCLT) run into several Promoted by HS Bharana, Era Infra Engineering has a wilful
thousands of crores by these companies. As per the RBI default of Rs 3,637 crore and comes fourth in the RBI list.
classification, a 'wilful default' would be deemed to have Bankruptcy court NCLT approved the company's acquisition
occurred if the borrower has defaulted in meeting their by SA Infrastructure Consultants Pvt Ltd in June this year.
repayment obligations to the lender even when they have REI Agro has a wilful default of Rs 3,350 crore. ED had
the capacity to honour the obligations. arrested Sandip Jhunjhunwala, Managing Director of REI Agro
A wilful default happens when the borrower has not utilised Ltd, in connection with a money laundering investigation
the finance from the lender for the specific purpose for against him for allegedly defrauding a consortium of banks in
which finance was availed, and has diverted the funds for 2018. The company was once the world's largest basmati rice
other purposes, or siphoned off funds, or disposed of or processing and marketing firm during its peak period in 2013.
removed the movable fixed assets or immovable property Promoted by fugitive Jatin Mehta, Winsome Diamonds has
given for the purpose of securing a term loan without the wilful default of Rs 2,927 crore. Mehta fled the country soon
knowledge of the bank.
after the fraud was detected. Forever Precious Jewellery,
Mehul Choksi, promoter of Gitanjali Gems, and his nephew also from the Winsome Diamond group, defaulted another
Nirav Modi fled India after an FIR was filed when the loan Rs 1,692 crore. A London court had issued a worldwide
fraud committed by the company was reported. The Serious freezing order in 2022. The Mehtas allegedly carried out
Fraud Investigation Office (SFIO) recently dropped charges over $1 billion fraud whereby proceeds of bullion advanced
against 60 individuals and entities in the ongoing Gitanjali to two companies were diverted using shell companies
Gems fraud case. around the world. (Source: The Indian Express)

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