PNB scam: Govt makes passport details must for loans of Rs 500 mn and above

For all existing loans of over ~50 million, banks have been asked to collect passport details of borrowers within 45 days
Passport details of borrowers taking loans of Rs 500 million (Rs 50 crore) and more have been made mandatory to ensure swift action in case of fraud and to prevent fraudsters from fleeing the country, a top official said on Saturday. 

The passport details will help banks to take timely action and inform the relevant authorities to prevent fraudsters from fleeing the country.

"Next step on clean and responsible banking. Passport details must for loans above Rs 500 million (Rs 50 crore). Step to ensure quick response in case of fraud," Financial Services Secretary Rajiv Kumar tweeted.

This is a preventive step to avoid the flight of economic offenders,  said Kumar, adding that banks were to collect passport details of all new borrowers of loans in excess of Rs 500 million (Rs 50 crore). 

For all existing loans of over Rs 500 million (Rs 50 crore), banks have been asked to collect passport details of borrowers within 45 days, he added.

In the absence of passport details, banks were hamstrung in taking timely action to prevent defaulters, especially wilful ones, from fleeing the country.

Several big defaulters like Nirav Modi, Mehul Choksi, Vijay Mallya, and Jatin Mehta have fled the country, putting the recovery mechanism in a quandary.

Last week, the Cabinet approved the Fugitive Economic Offenders Bill after Nirav Modi and his uncle Mehul Choksi allegedly defrauded state-owned Punjab National Bank (PNB) of Rs 127 billion (Rs 12,700 crore) and left the country. Modi and Choksi are refusing to cooperate with law enforcement agencies. 

The proposed fugitive law aims to impound and sell assets of Nirav Modi-type escapees with a view to quickly recover dues. It will also apply to defaulters who have an outstanding of Rs 1 billion (Rs 100 crore) or more and have escaped from the country.

As part of a drive to clean the banking system, the Finance Ministry last week had directed public sector banks (PSBs) to probe all NPA accounts of over Rs 500 million (Rs 50 crore) for possible fraud and, accordingly, report the cases to the CBI.  

Besides, the ministry had asked banks to monitor loans above Rs 2.5 billion (Rs 250 crore) and raise a red flag whenever the original covenants of the loans are violated. This was spelt out as part of a six-point reform measure announced for PSBs in January.   

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel