Government Directs State-owned Banks to Obtain Passport Details of Big Borrowers

Last week, the Cabinet approved the Fugitive Economic Offenders Bill, which provides for confiscating all assets of absconding fraudsters and loan defaulters to recover dues in a bid to tighten noose around financial fugitives.

New Delhi, March 6: The Ministry of Finance has directed state-owned banks to obtain and furnish details of borrowers, who have loans of more than Rs 50 crore, to prevent fraudsters and wilful defaulters from fleeing the country. The details will have to be furnished within 45 days.

If a borrower doesn’t have a passport, banks must ask for a certificate of declaration that he/she doesn’t have a passport. The banks are also asked to modify the loan application form, so that passport details are obtained on the very first step of loan application.

These details will help banks and authorities to stop wilful defaulters from fleeing the country. In the absence of such details, it is very difficult to block their exit from the country.

The government is taking these measures after diamond merchants Nirav Modi and Mehul Choksi fled the country after allegedly duping the Punjab National Bank of Rs 12,700 crore. The duo obtained fraudulent Letters of Undertaking and extracted money from other banks on PNB’s guarantee.

Last week, the Cabinet approved the Fugitive Economic Offenders Bill, which provides for confiscating all assets of absconding fraudsters and loan defaulters to recover dues in a bid to tighten noose around financial fugitives. The Union Cabinet also approved setting up of a National Financial Reporting Authority (NFRA) as an independent regulator for the auditors.