There have been a string of recent incidents of businessmen committing default on the payments owed to banks and financial institutions and then fleeing overseas.
According to official reports, 31 willful defaulters fled the country to avoid prosecution and punishment for violation of the laws and Indian authorities managed to get back only one person to India.
This has exposed the imminent need to fortify existing laws and procedures. Robust deterrents have to be built up to enforce such laws to thwart such fraudsters escaping from India to foreign soil.
The Parliament is deliberating to lodge a Fugitive Economic Offenders bill empowering relevant authorities to confiscate the assets of so-called fugitive economic offenders (guilt of an economic offense involving 1 billion rupees (US$15 million) or more) along with preparing a list (no-fly) of willful defaulters.
It is estimated that economic offenders/fraudsters absconding from India to foreign soil are involved in the fraudulent cases worth $210 billion bad debt on banks’ balance sheets.
There is huge pressure mounting on the central government from all quarters of the people to take stringent action on willful defaulters absconding and bad loans piling up are crippling the banking system challenging the very existence of the banks.
The government is initiating immediate curative and damage controlling measures to sternly deal with willful defaulters (who willful absconds the country) to assuage public anger at the government and such willful defaulters.
The Reserve Bank of India (RBI) recently brought certain major policy modifications mandating the banks to resolve any default loan within 180 days of default and report willful defaulters list to the RBI on frequent basis.
It is high time for the government to amend the existing laws and procedures and more importantly to ensure modified laws are implemented without delay and any glitches to punish the willful economic defaulters and prevent them from fleeing India. Else more people will embrace the pattern of new fraud system introduced by the recent billionaires/fraudsters and escape unpunished – leading to the downfall of the banking and financial system leaving the economic development of nation and common man at jeopardy.
Bhumesh Verma, is a Corporate Lawyer with over 2 decades of experience in advising domestic and international clients, with a place in “The A-List – India’s Top 100 Lawyers” by India Business Law Journal. He keeps writing frequently on FDI, M&A and other corporate matters. With Research and Inputs by Paruchuri Baswanth Mohan