Action on willful defaulters taken

The Indian Government has issued instruction that all accounts exceeding Rs.50 crore, if classified as Non-Performing Assets (NPAs), be examined by banks from the angle of possible fraud.

In addition, Public Sector Banks (PSBs) have also been advised to seek a report on the borrower from the Central Economic Intelligence Bureau, in case an account turns NPA.

These are among the key steps taken with regard to frauds reported by banks, said the Finance Ministry in a note on 4 June 2019.

The steps also include:

Proactive action has been taken against willful defaulters, with FIRs being registered by PSBs against 2,881 willful defaulters.

For enforcement of auditing standards and ensuring the quality of audits, Government has established National Financial Reporting Authority as an independent regulator.

Fugitive Economic Offenders Act, 2018, has been enacted in order to deter economic offenders from evading the process of Indian law by remaining outside the jurisdiction of Indian courts.

Pursuant to Government’s advice to PSBs, they have been obtaining certified copy of passport of the promoters/directors and other authorised signatories of companies availing loan facilities of more than Rs.50 crore and are ensuring rotational transfer of officials/employees on sensitive posts.

Above position has been clarified in response to Rajya Sabha on 1 Jan 2019, said the Ministry on recent reports of increase in detection and reporting of bank frauds due to Government’s proactive measures.

Occurrence of frauds was enabled by laxity in the financial system which has been systematically dealt with through comprehensive banking reforms instituted by the Government to address underlying causes and provide for proactive checking for and detection of frauds, said the Ministry. fiinews.com