After PNB fraud, India takes steps to prevent defaulters from flying abroad

New Delhi: Following the infamous PNB fraud, India is trying to prevent loan defaulters from flying abroad.

Billionaire jeweller Nirav Modi and Mehul Choksi have been accused in the USD 2 billion fraud in Punjab National Bank in which they allegedly cheated the nationalised bank with the purported involvement of a few employees of the bank.

Weeks after the nation’s biggest scam, lawmakers and courts have begun drafting tighter rules to prevent citizens fleeing abroad with unpaid dues.

According to a Bloomberg report, top executives of indebted Aircel Ltd., owned by Malaysian billionaire T Ananda Krishnan were ordered by a Mumbai court last week from leaving India.

India has compiled a list of 91 people it is considering detaining from flying out of the country because of their involvement with companies that have defaulted on loans, according to a report by Bloomberg.

Aiming to tighten the noose around fugitives like Nirav Modi and Vijay Mallya, the Cabinet on March 1 approved the Fugitive Economic offenders Bill that provides for confiscating all assets of absconding fraudsters and loan defaulters.

The proposed law aims to impound and sell assets of Nirav Modi-type escapees with a view to quickly recover dues. The law will apply to defaulters who have an outstanding of Rs 100 crore or more and have escaped from the country.

Earlier in February, the Reserve Bank sought to push more large loan defaulters toward bankruptcy courts.

Under the new rules, banks will have to file for insolvency proceedings against loan defaulters with Rs 2,000 crore (USD 311 million) or more if a resolution plan is not implemented within 180 days of the initial occurrence of default, the RBI said.

It warned that any failure on the part of banks to meet the prescribed timelines, or any actions they take to conceal the actual status of accounts or evergreen stressed accounts, will expose banks to potential monetary penalties and other actions.

The central bank also said that all prior schemes, including the popular Strategic Debt Restructuring Scheme, the Scheme for Sustainable Structuring of Stressed Assets, and the Corporate Debt Restructuring Scheme, will be withdrawn with immediate effect.

Some 31 Indians have fled the country to avoid prosecution, lawmakers were told in parliament on March 14.

Nirav Modi along with his wife Ami, brother Neeshal and Mehul Choksi had also left India in the first week of January before the Punjab National Bank accused them of committing the fraud. They have not returned to India since then.