(FE)
In a fresh crackdown against defaulters, the Serious Fraud Investigation Office (SFIO) has started probing details of certain non-performing asset (NPA) accounts of public sector banks in which, prima facie, there is a violation of rules. An established steel company, which is among the biggest defaulters, is on top of the SFIO radar for possible violation of rules, which includes diversion of funds for purposes other than what it had cited to get loans, official sources said. A diversified conglomerate, with interests ranging from consumer electronics to DTH services, is another such large defaulter whose loan accounts are also being looked into, the sources added. While 90% of bad loans could be a result of “genuine business failures or other concerns”, possible fraud can’t be ruled out in at least 10% of cases, one of the sources said.
“The SFIO is getting into details of these accounts where there is a prima facie case for fraud,” he added. In case of any contravention of rules by these defaulters, appropriate action will follow.” As of December 2016, commercial banks had stressed assets (both gross NPA and restructured standard advances) worth Rs 9.64 lakh crore, with most in public sector banks. The massive bad debts have led to a “twin balance sheet problem” — over-leveraged companies and bad-loan-encumbered banks — severely denting investments in the economy. Sources had earlier told FE that the government could launch a crackdown on 5-10 big firms that are perceived to be among the top wilful defaulters of the 50-odd companies that account for the bulk of banks’ massive bad loans. Banking sources said the government is exploring all the possible angles on toxic assets.
