PASSPORT MANDATORY FOR LOANS OF RS 50 CRORE AND MORE

Passport details of borrowers taking loans of Rs 50 crore and more

have been made mandatory to ensure a swift action in case of fraud and

prevent fraudsters from fleeing the country. Passport details will

help banks to take timely action and inform the relevant authorities

to prevent fraudsters from fleeing the country.

For all existing loans of over Rs 50 crore, bank shave been asked to collect passport details of borrowers within 45

days. In absence of passport details, banks were hamstrung in taking timely action to prevent defaulters especially willful one from fleeing the country. Several big defaulters like Nirav Modi, Mehul Choksi, Vijay Mallya and Jatin Mehta have fled the country putting the recovery mechanism in quandary. Last week, the Cabinet approved the Fugitive Economic Offenders Bill after Nirav Modi and his uncle Mehul Choksi allegedly defrauded state-owned Punjab National Bank (PNB) of Rs 12,700 crore and left the country and are refusing to cooperate with law enforcement agencies.

The proposed fugitive law aims to impound and sell assets of Nirav Modi-type escapees with a view to quickly recover dues. It will also apply to defaulters who have an outstanding of Rs 100 crore or more and have escaped from the country. As part of drive to clean the banking system, the Finance Ministry last week had directed public sector banks (PSBs) to probe all NPA accounts of over Rs 50 crore for possible fraud and accordingly report the cases to CBI. Besides, the ministry had asked banks to monitor loans above Rs 250 crore and red flags whenever the original covenants of the loans are violated. This was spelt out as part of 6 point reform measures announced for PSBs in January.