The government has compiled a list of people it is considering barring from leaving the country because of their involvement with companies that have defaulted on loans, a person with knowledge of the matter said.
The people were selected because of their roles as directors or owners of Indian companies which have been identified as so-called wilful defaulters, firms which refuse to repay loans despite having the means to do so, the person said, asking not to be identified as the information is private. Some 400 Indian companies have been classified as wilful defaulters.
Public anger against Modi’s administration is mounting after Nirav Modi and Mehul Choksi — two prominent jewelers– left the country just before their alleged involvement in the nation’s largest bank fraud at Punjab National Bank came to light. Less than a month after first details emerged, lawmakers introduced a bill that will give authorities power to impound the assets of fugitive offenders people who have fled the country after committing an economic offense involving Rs 100 crore or more.
In addition to identifying those executives, Prime Minister Narendra Modi’s administration has asked Indian banks to provide passport details of a bigger group of individuals who have signed applications or stood as guarantors for soured credits of more than Rs 50 crore, the person said, declining to elaborate. Some personals from that group may also be barred from leaving the country if they are found to have committed fraud or engaged in wilful defaults, the person added.
Finance Ministry spokesman D S Malik didn’t respond to calls made to his mobile phone.
“It is logical that someone accused of an offence is not allowed to leave the country because extradition requires proof of criminal offence and it is difficult to establish this beyond doubt,” Aditya Puri, the chief executive officer of HDFC Bank Ltd., told the Times of India in an interview published last week. “Banks are custodians of public money.”
India has seen several high-profile cases of defaulters who left the country and are now fighting against requests for extradition. These include Vijay Mallya, the tycoon behind India’s best-selling beer, who is becoming something of a fixture in London courts.
“Those who had funneled money overseas hoping to flee if the recovery push comes to shove will be worried,” said Kranthi Bathini, director of Mumbai-based financial advisory company WealthMills Securities Pvt. “While some horses have already bolted to countries with tough extradition laws, it is not yet too late to close the gates.”
With general elections due early next year, Modi is under pressure to act against wealthy defaulters. India’s regulator has also stepped up efforts to clean up Rs 13,631 crore of bad loans in the banking system.