Defaulters Owe Banks about ₹1.8 lakh crore as of December 2015

The Reserve BAnk of India(RBI) and the Supreme Court of India (SCI)are locked in a tussle over disclosure of the names of high-profile defaulters, banks are increasingly taking legal recourse to recover their mounting pile of bad loans.

According to data published by the Credit Information Bureau (India) Ltd (CIBIL), as of December 2015, banks and financial institutions had filed over 12,300 cases in respect of loans above ₹1 crore.

Defaulters in these cases owed banks about ₹1.8 lakh crore as of December 2015, more than double the amount in the previous year. Just the top 20 borrowers owe banks about ₹13,000 crore as of December 2015. 

Banks normally file a suit as a last resort to secure recovery, and the number of ‘suit-filed’ bad loans –– as they are called –– now accounts for over 40 per cent of the total bad loans. 

Top defaulters

 

Kingfisher Airlines tops the list of defaulters, owing ₹1,200 crore (under suit-filed accounts) to SBI, the largest lender.

Other big-money defaulters are Hukumchand Mills (₹1,169 crore), GET Power (₹ 1,115 crore), Winsome Diamonds and Jewellery (₹900 crore), Etisalat DB Telecom (₹807 crore) and Forever Precious Jewellery (₹747 crore).

Banks and financial institutions submit the list of suit-filed accounts of ₹1 crore and above, and provide quarterly updates to CIBIL and to the RBI. They also submit the list of suit-filed accounts (wilful defaulters) of ₹25 lakh and above. 

A long-drawn battle

Banks take 15 years in some cases to recover their money, and the delay erodes the value of the assets substantially. According to a World Bank report, creditors in India recover only 25 cents to a dollar, compared to 36 cents in China and 80 cents in the US.

The long-drawn process involved in litigation has impeded recovery. Many of the defaulters on CIBIL’s list have remained there for the past 2-3 years. Kingfisher Airlines, Etisalat DB Telecom, Deccan Chronicle, Zoom Developers and Electrotherm have been on the list of defaulters since December 2012.

In many cases, borrowers have defaulted across banks. The defunct Kingfisher Airlines owes big amounts to various banks: SBI, Corporation Bank, PNB, State Bank of Mysore, Bank of Baroda and Federal Bank, Oriental Bank of Commerce and Axis Bank have all filed cases to secure total dues of about ₹3,300 crore. The total amount in default, which includes loans on which banks have not yet filed a suit, is higher.