In an effort to tighten the noose around loan defaulters, ministry of finance has written to all banks to start bifurcating non-performing assets as either wilful default or fraud. Banks have also been asked to prepare a list of loan defaulters for “naming and shaming” in public.
“We have written to all public sector banks to start naming and shaming all loan defaulters by preparing a list and putting them out on public platforms. The banks also will have to start stating what kind of non-performing asset (NPA) it has encountered. Simply stating an NPA won’t work anymore. The banks will have to come out in public about whether it is a fraud or a wilful default,” said a top official of finance ministry on condition of anonymity.
A wilful default is a situation where the borrower has the required capacity to pay but decides not to and a fraud is when the borrower siphons off his/her money to other mode of parking say shell companies and displays a false inability to pay.moneycontrol