The Reserve Bank of India (RBI) has flagged 2,664 companies as willful defaulters, revealing a major problem in the banking sector. Collectively, these companies failed to repay their loans $196 crore, despite having the ability to do so. The worrying trend has raised alarm about the financial risks posed to the banking system by large corporate borrowers.
Livemint was unable to independently verify the development of this news.
According to data disclosed by the Reserve Bank of India in March 2024, topping the list of defaulters is Gitanjali Gems Ltd, which owes $8,516 Crores. In response to an RTI filed by The Indian Express, the central bank provided details of the top 100 defaulters, excluding individuals and foreign entities. The second place is ABG Shipyard, which has a large number of $4,684 Crores.
Top ten defaulting companies
Gitanjali Gemstones Limited: $8,516 Crores Rs.
ABG Shipyard GmbH: $4,684 Crores Rs.
Comcast Steel & Power: $3,557 Crores Rs.
Times infrastructure projects: $3,507 Crores Rs.
Fascinating Diamonds and Jewelry: $3,356 Crores Rs.
Transstroy (India): $3,261 Crores Rs.
Rotomac Global: $2,894 Crores Rs.
Zoom Developer: $2,217 Crores Rs.
Unity infrastructure projects: $1,987 Crores Rs.
The number of willful defaulters has risen steadily over the past four years, climbing from 2,154 in March 2020 to 2,664 in March 2024. $152 Crores Rs. $1.96 billion during the same period.
As per RBI norms, a borrower will be labeled as a willful defaulter if he defaults on repayments despite having the financial capacity to pay, or if the funds are misused for purposes other than those stipulated in the loan agreement. This includes withdrawing or diverting funds from intended projects.
One high-profile case involves Gitanjali Gems, promoted by Mehul Choksi, who was allegedly involved in $Punjab National Bank fraud amounted to Rs 14,000 crore. The investigation revealed that the company illegally transferred assets used to secure the loans without notifying lenders. Choksi and his nephew Nirav Modi are also being investigated in connection with several fraud cases.
Another noteworthy name on the list of defaulters is ABG Shipyard. The company’s management is suspected of misusing loans used to develop its shipyard and committing large-scale financial irregularities. Other companies in the top 10 include Winsome Diamonds, Transstroy India and Concast Steel & Power, with debts running into hundreds of millions of rupees.
The Reserve Bank of India’s list also highlighted Rotomac Global, which owes $2,894 Crore, and Unity infrastructure projects with dues of $1,987 crore as willful defaulters.
The central bank’s data highlighted major failings in lending and monitoring processes. Investigations into these borrowers are ongoing and involve agencies such as the Serious Fraud Investigation Office (SFIO) and the Enforcement Directorate (ED), particularly in cases involving the transfer of funds or fraudulent practices.
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