Tag: Mehul Choksi

Number of unique wilful defaulters rose by 286 in pandemic, BFSI News, ET BFSI

Banking & Finance

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The number of wilful defaulters has increased from 2,208 to 2,494 at the end of March 31, 2021, Finance Minister Nirmala Sitharaman informed Parliament on Tuesday.

As per RBI data on global operations, during the last three financial years, public sector banks (PSBs) have effected recovery of Rs 3,12,987 crore in non-performing assets (NPAs) and written-off loans.

“RBI has further apprised that the total number of unique wilful defaulters reported by PSBs was 2,017 as on March 31, 2019, 2,208 as on March 31, 2020 and 2,494 as on March 31, 2021,” she said.

Bank NPAs

Sitharaman said that the RBI has apprised that as per data reported by banks to the Central Repository of Information on Large Credits (CRILC), the total funded amount outstanding of borrowers whose sector code is private and whose loans are classified as NPAs in the PSBs as on March 31, 2019, March 31, 2020, and March 31, 2021, is Rs 5,73,202 crore, Rs 4,92,632 crore and Rs 4,02,015 crore respectively.

Banks are required to take steps to initiate the legal process, wherever warranted, against the borrowers or guarantors for recovery dues, she said. They may also initiate criminal proceedings against wilful defaulters, wherever necessary, she added. In reply to another question, the Finance Minister said public sector banks have done a write-off of Rs 1,31,894 crore during 2020-21 as compared to Rs 1,75,876 crore in the previous year. As a result of the government’s strategy of recognition, resolution, recapitalisation and reforms have led to decline in gross NPAs as a percentage of total advances to 9.11 per cent as of March 31, 2021, from 11.97 per cent on March 31, 2015.

Top 100 wilful defaulters

The total size of the top 100 wilful defaults rose 5.34% in FY20 from Rs 80,344 crore as of March 2019.
Mehul Choksi-owned Gitanjali Gems topped the wilful defaulters’ list with Rs 5,693 crore dues, followed by Jhunjhunwala brothers’ REI Agro with Rs 4,403 crore and Jatin Mehta’s Winsome Diamonds & Jewellery with Rs 3,375 crore.

The top 10 wilful defaulters include another jewellery maker Forever Precious Jewellery, and Vijay Mallya’s Kingfisher Airlines Punjab National Bank had the highest exposure to Gitanjali Gems with Rs 4,644 crore of non-performing assets (NPA) as of March 2020. PNB also had Rs 1,447 crore exposure to Gili India and Rs 1,109 crore to Nakshatra Brands.

Write-offs

State Bank of India had Rs 1,875 crore dues from top 10 wilful defaulter ABG Shipyard with the bank writing o the entire amount. Uco Bank had Rs 1,970 crore exposure to REI Agro with half of it being written off.

Write-offs are accounting entries for shifting NPAs from the active balance sheet to off-balance sheet accounts. These are backed by 100% provision and therefore any recovery from these accounts adds to net profit.
RBI collects credit data from banks monthly, with data on defaults being collected on a weekly basis. The regulator has mandated banks to provide fully against NPAs older than four years and allowed to write these old NPAs.

The reduction in NPAs during FY20 was largely driven by write-os, RBI had said in its report on Trend & Progress of Banking in India. Banks’ total gross NPA reduced to 8.2% at the end of March 2020 from 9.1% a year earlier.



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SBI-led consortium raises Rs 792 crore by sale of Vijay Mallya’s UB shares, BFSI News, ET BFSI

Banking & Finance

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A consortium of banks led by the State Bank of India on Friday realized Rs. 792.11 crore by sale of shares in the bank loan fraud case involving Kingfisher Airlines and its former owner and fugitive economic offender Vijay Mallya.

These shares were handed over by the Enforcement Directorate (ED) to the consortium of banks.

Earlier SBI led consortium had realized Rs. 7181.50 crore by liquidating assets handed over to SBI led consortium by ED, the agency said in a press statement on Friday.

In addition, Rs. 1060 crore worth asset has been allowed to the banks by Fugitive Economic Offense Court in PNB/ Nirav Modi Case & Rs. 329.67 Crore has been confiscated by ED under provisions of Fugitive Economic Offenders Act, the agency added.

On July 1 Purvi Modi (sister of Nirav Modi) transferred Rs. 17.25 crore from proceeds of Crime from her foreign bank account to ED.

Few days back, ED has further handed over assets worth Rs. 3728.64 Crore to the SBI led consortium including shares of Rs. 3644.74 Crore, Demand Draft of Rs. 54.33 Crore and immovable properties worth Rs. 29.57 Crore.

The statement issued by the agency further added that Vijay Mallya, Nirav Modi and Mehul Choksi have defrauded Public Sector Banks by siphoning off the funds through their companies which resulted in total loss of Rs.22,585.83 Crore to the banks.

Till date ED has transferred assets worth Rs. 12,762.25 Crore to the Public Sector Banks and confiscated assets of Rs. 329.67 Crore. ED had also recovered Rs. 17.25 Crore from Purvi Modi. As on date, assets worth 58% of total loss to the banks have been handed over to Banks/confiscated to government of India.

The agency claimed that till date it has attached/seized assets of Rs. 18,217.27 Crore under the provision of Prevention of Money Laundering Act (PMLA).



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Vijay Mallya & PNB cases: ED transfers Rs 9,371-crore assets to banks, govt

Personal Finance

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A substantial part of the assets in question was held in the name of dummy entities, trusts, third persons or relatives of these accused and these entities were their proxies for holding the properties.

The Enforcement Directorate (ED) on Wednesday said it had transferred to public-sector banks and the Central government assets worth `9,371 crore belonging to fugitive economic offenders Vijay Mallya, Nirav Modi and Mehul Choksi.

The agency has attached/seized assets worth a total of Rs 18,170 crore, constituting over 80% of the losses of Rs 22,586 crore incurred by banks due to the alleged frauds committed by these three businessmen. These also include properties worth Rs 969 crore located abroad.

Of these, assets worth about Rs 329.67 crore have been confiscated and those amounting to Rs 9,041.5 crore have been handed over to the PSBs (taking the total to Rs 9,371 crore), the ED said.

Meanwhile, Nirav Modi has lost the first stage of his extradition appeal in the London high court, just over two months after his extradition to India was ordered by UK home secretary Priti Patel in the PNB scam case.

Analysts said the move to attach assets was made substantially easier by the enactment of the Fugitive Economic Offenders Act, 2018. The law empowers authorities to attach assets of such offenders who flee India to escape the reach of law even without a conviction.

Also, this law provides for the attachment of all the assets of the offenders, irrespective of whether these are the proceeds of crime or not. It covers offences with a value of Rs 100 crore or more.

The ED said it had recently transferred attached shares worth Rs 6,600 crore to a State Bank of India (SBI)-led consortium following an order of the PMLA Special Court, Mumbai. On Wednesday, the Debt Recovery Tribunal, on behalf of the consortium, sold the shares of United Breweries for Rs 5,824.50 crore. Further realisation of close to Rs 800 crore through share sale is expected by June 25. With its help, state-run banks had earlier recovered Rs 1,357 crore by selling the attached shares, the agency added.

After the cases were registered by the CBI, the ED unearthed “myriad web of domestic and international transactions and stashing of assets abroad”. “Investigation has also irrevocably proved that these three accused persons used dummy entities controlled by them for rotation and siphoning off the funds provided by the banks,” the ED said.

A substantial part of the assets in question was held in the name of dummy entities, trusts, third persons or relatives of these accused and these entities were their proxies for holding the properties.

Complaints were filed against all the three accused after the investigation under the Prevention of Money Laundering Act was completed. Extradition requests were sent for them to the UK (for Mallya and Nirav Modi) and Antigua and Barbuda (for Choksi).

Already, the extradition of Mallya has been ordered by the Westminster Magistrates Court, which has been confirmed by the UK High Court. Since Mallya has been denied permission to file an appeal in the Supreme Court of the UK, his extradition to India is almost final, the agency said.

Choksi, who was recently discovered in Dominica after he disappeared from Antigua, is also facing extradition proceedings.

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Banks tag more borrowers as wilful defaulters during IBC suspension, BFSI News, ET BFSI

Banking & Finance

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Banks slapped more borrowers with a wilful defaulter tag during April-December 2020 when the Insolvency and Bankruptcy Code was under suspension.

They classified loans of over Rs 28000 as wilful defaults during the first nine months of last fiscal as against around Rs 23,000 a year ago, according to a report.

A borrower is labelled wilful defaulter if the loans is not repaid despite having the means to repay or it is diverted for use other than the purpose.

A wilful defaulter tag borrower then faces a ban on bank funding the total outstanding wilful default as of December 31 at Rs 2.4 lakh crore with State Bank of India accounting for Rs 62,000 crore, of which Rs 18,000 crore were added in the first nine months of the last fiscal, according to data from credit bureau TransUnion Cibil.

The largest share of wilful defaulters is Maharashtra at over Rs 80,000 crore, followed by Delhi at Rs 32,000 crore and West Bengal at Rs 23,000 crore.

Fearing investigations, audit and vigilance inquiries, bankers generally do not want to opt for resolution and go for full recovery from the defaulter.

Top borrowers

The country’s top 100 wilful defaulters owe Rs 84,632 crore to banks as of March 2020, with the top 10 including, Winsome Diamonds & Jewellery and accounting for 32% of it, data from the Reserve Bank of India shows.

Banks tag more borrowers as wilful defaulters during IBC suspension

While banks wrote off nearly three-fourth of it to clean their balance sheet and get tax benefits, the default borrowers continue to appear in RBI’s internal CRILC database till they clear the default.
The total size of the top 100 wilful defaults rose 5.34% in FY20 from Rs 80,344 crore as of March 2019, according to data shared by RBI in response to an application under the Right to Information (RTI) Act.

Mehul Choksi-owned Gitanjali Gems topped the wilful defaulters’ list with Rs 5,693 crore dues, followed by Jhunjhunwala brothers’ REI Agro with Rs 4,403 crore and Jatin Mehta’s Winsome Diamonds & Jewellery with Rs 3,375 crore.

The top 10 wilful defaulters include another jewellery maker Forever Precious Jewellery, and Vijay Mallya’s Kingsher Airlines.

The stack-up

Punjab National Bank had the highest exposure to Gitanjali Gems with Rs 4,644 crore of non-performing assets (NPA) as on March 2020.

PNB also had Rs 1,447 crore exposure to Gili India and Rs 1,109 crore to Nakshatra Brands.

State Bank of India had Rs 1,875 crore dues from top 10 wilful defaulter ABG Shipyard with the bank writing o the entire amount. Uco Bank had Rs 1,970 crore exposure to REI Agro with half of it being written off.

Write-offs are accounting entries for shifting NPAs from the active balance sheet to off-balance-sheet accounts. These are backed by 100% provision and therefore any recovery from these accounts adds to net profit.

RBI collects credit data from banks monthly, with data on defaults being collected on a weekly basis. The regulator has mandated banks to provide fully against NPAs older than four years and allowed to write these old NPAs.

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