The Indian government is taking the offensive against those economic offenders attempting to run away from India. Public sector banks are now directed to collect passport details from borrowers seeking to obtain loans higher than Rs 50 crore.
This measure is the next step towards clean and responsible banking, Rajeev Kumar, secretary of Department of Financial Services tweeted. Banks must now make their loan application forms according to the new rule and assist the government in preventing the flight of economic offenders.
For those already possessing loans above the stipulated amount of Rs 50 crore, passport details must be submitted by the borrower to their concerned banks within 45 days. In the eventuality that passport details are not produced, banks are expected to take timely action in preventing debtors from fleeing the country.
This decision is the outcome of the recent multi-crore bank frauds from Nirav Modi, Mehul Choksi, Vijay Mallya and Jatin Mehta who have rocked the banking system by borrowing $1.77 billion from Punjab National Bank and fleeing the country before settling their debts. Moreover, they are refusing to cooperate with the law enforcement agencies.
The Indian government, therefore, came up with the Fugitive Offenders Bill last week, which aims to seize and sell the possessions of fraudsters like Nirav Modi with the aim of recovering debts quickly. This new bill also applies to cheats with Rs 100 crore or more who escaped the country.
As part of an initiative to clean the banking system, the Finance Ministry also bounded public sector banks (PSBs) to inquire for possible fraud all NPA accounts of over Rs 50 crore and report the cases to CBI thereafter.
The government also directed PSBs to consolidate nearly 35 overseas operations without impacting the banks’ international presence in these countries so as to improve cost efficiency and interactions in international markets. Therefore, 69 operations were pinpointed for additional examination, which includes bank branches, joint ventures, subsidiaries, remittance centers and representative offices. The Ministry of Finance also stated that they would examine 216 overseas operations to facilitate streamlining of overseas operations.