In a proposal that comes against the backdrop of spiraling bad loans in the banking system, RBI has suggested to watchdog Securities and Exchange Board of India (SEBI) to bar ‘wilful’ defaulters from raising funds through capital market. Further, to facilitate such restrictions on entities found to have ‘wilfully’ defaulted on bank loans, the Reserve Bank is exploring ways to share details of these defaulters with SEBI on a real time basis, against the practice of reporting such entities on quarterly basis.
According to RBI, sharing details on real time basis could better equip SEBI and other agencies would ensure that wilful defaulters identified by banks do not have an opening to raise further funds from gullible investors through the securities market.
However, final decision on this matter, which first needs to be discussed by SEBI internally, is pending and would be finalized, taking into account the provisions in various sets of existing regulations and the views of all stakeholders.
Uptill now, banks have been advised to examine all cases of wilful defaults of Rs 1 crore and above for filing of suits as well as consider criminal action wherever instances of cheating/fraud by the defaulting borrowers have been detected, according to RBI. The gross NPAs or bad loans of the domestic banking system were at 4.4 per cent of gross advances.