At least 19 lenders have filed 529 wilful default cases worth Rs 18,548.4 crore in the three months ended June 2019. This stretches across private and public sector banks
(PSBs). Foreign banks
are also represented on the list, as is the co-operative bank segment.
The numbers are based on an analysis of the data from TransUnion CIBIL. The firm maintains information on individuals and entities defined as wilful defaulters, or entities that have the capacity to pay back their loans but still default on them. It is updated with a lag and not all lenders provide numbers at the same time. The analysis looked at lenders who recorded an increase in the June quarter over March. It included defaulters where the value was Rs 1 crore or more.
The lenders under consideration had outstanding amounts of Rs 2.03 trillion with the wilful defaulter tag. The latest quarter represents a 10 per cent increase over a three-month period for the sample.
There is a difference between banks
based on their ownership. Private sector banks
with an increase in wilful defaulters
only recorded a 3.5 per cent increase in the value of amount outstanding. PSBs showed a 13.5 per cent increase. Others, which include foreign banks and lenders, showed a 12 per cent rise. Their base is lower than both the private and public sector. The highest value remains with PSBs for the sample under consideration. This is followed by the private sector.
Note: Based on 19 lenders which recorded an increase in amounts outstanding for the June quarter. Data extracted on 12th September, 2019. Source: TransUnion Cibil, Business Standard calculations
A senior banker, previously associated with the public sector, said officials may be erring on the side of caution when it comes to such cases. They would rather declare an account as a wilful defaulter if there is the slightest discrepancy, rather than face questions from investigative agencies if there is subsequent scrutiny.
“Even a small deviation I will declare,” he said, of the stance that many PSB executives may take in such circumstances.
There may be a case for an increase in the number of such cases. Samir Paranjpe, partner, Grant Thornton India, said that the current economic situation may also play a role.
“Typically, there is an increase in bad loans when economic conditions are stressed. This, in turn, leads to a greater scrutiny on these accounts during such time, which results in greater identification of wilful defaulters.
So, one can expect more such cases to be reported in this economic cycle,” he said.
The Reserve Bank of India (RBI), which regulates banks in India, recorded an increase in bank frauds in its latest annual report.
“The number of cases of frauds reported by banks increased by 15 per cent in 2018-19 on a year-on-year basis…with the amount involved rising by 73.8 per cent, though mostly related to occurrences in earlier years,” it said.
Banks took an average of 22 months to detect fraud, according to the report. It is 55 months for large frauds of Rs 100 crore or more. PSBs account for the largest amount of lending. They also account for the bulk of the frauds, noted the RBI.