Wilful loan defaults grow 10 times since 2012 to Rs 2.4 trn: Report

These defaulters have the capacity to repay their loans but choose not to do so, says a report

Wilful loan defaults in India have grown ten-fold since 2012 and amount to Rs 2.4 trillion, said a media report on Wednesday listing a shipyard company’s promoter and two brothers as among top culprits.

The Reserve Bank of India (RBI) defines wilful defaulters as people who had the capacity to repay their loans but chose not to. Companies that use funds for purposes other than what the loans were originally granted for are wilful defaulters as well.

The 'Times of India' named Rishi Agarwal, Arvind Dham, Mehul Choksi, and the Sandesara brothers among defaulters. Agarwal is the promoter of ABG Shipyard Ltd, which allegedly has failed to repay loans worth Rs 6,382 crore and is the top defaulter. It’s followed by Amtek Auto Limited and subsidiaries, promoted by Arvind Dham. The group has defaulted on loans worth Rs 5,885 crore.

The newspaper report considered accounts that have an outstanding loan amount of Rs 25 lakh or more. There were over 12,000 such cases, till March 31, 2022.

The Sandesara brothers, Nitin and Chetan, are third on the list and fugitive economic offenders (FEO) according to the Indian government. They have allegedly defaulted on loans worth Rs 3,757 crore taken by their company Sterling Global Oil Resources Pvt Ltd and its subsidiaries.

Rs 2.4 trillion, the total default amount, is 42 per cent of the total budgeted amount for MGNREGA, the government’s job guarantee scheme for rural India. It is 2.7 times the Rs 86,200 crore allotted to the health ministry in Budget 2022.

As many as nine companies have defaulted on loans worth Rs 2,000 crore or more. Apart from the three names mentioned above, there are names like Kapil and Dheeraj Wadhwan (Dewan Housing Finance Limited and others), Sanjay and Sandeep Jhunjhunwala (Rel Agro) and Mehul Choksi (Gitanjali Gems Ltd and others).

Sanjay Sureka (Concast Steel and Power Ltd), Atul Punj (Punj Lloyd Ltd) and Jatin R Mehta (Winsome Diamonds & Jewellery Ltd and others) are the other names on the list.

The newspaper said that 95 per cent of the defaults were recorded in the books of public sector banks (PSBs). And out of this, the State Bank of India (SBI) and its associates account for over 30 per cent of such loans.

Punjab National Bank (PNB), Union Bank of India (UBI) and Bank of Baroda (BoB), each has over 10 per cent share in the outstanding amount.

Maharashtra tops the list with the most defaults. The state which has the highest gross state domestic product (GSDP), Maharashtra, accounted for 34 per cent of all the loan defaults in the country. Delhi recorded the second highest loan defaults, accounting for 17.5 per cent of the total. West Bengal stood at the third spot, with 8.8 per cent of the total wilful defaults.

According to the report, FEOs Vijay Mallya and Nirav Modi do not make it to the list of the top wilful defaulters in India. They both have been seeking asylum in the United Kingdom (UK). However, Modi's uncle Mehul Choksi is included in the list. He has been living in Antigua and Barbuda since fleeing from India in 2018. He is also accused in the PNB Scam along with his nephew Nirav Modi.