Explained Facts 1,629 borrowers not paying Rs.1.62 lakh crore loan

Details Facts Timline 1,629 corporate borrowers as wilful defaulters, with outstanding loans totaling ₹1.62 lakh crore

As of March 31, 2025, India’s public sector banks have identified 1,629 corporate borrowers as wilful defaulters, with outstanding loans totaling ₹1.62 lakh crore, according to the Finance Ministry’s statement in Parliament. 

Below is a detailed overview, including facts and a timeline of the wilful defaulter issue in India, based on available information.

Definition of Wilful DefaulterA wilful defaulter is a borrower who deliberately fails to repay loans despite having the financial capacity to do so, or who diverts funds, siphons off assets, or engages in fraudulent transactions. 

The Reserve Bank of India (RBI) defines wilful default as occurring when:

The borrower has the ability to pay but intentionally defaults.

Funds are diverted for purposes other than those for which the loan was taken.

Assets securing the loan are disposed of without the lender’s approval.

The borrower engages in fraudulent transactions or falsifies financial information.

Key Facts About the 1,629 Wilful DefaultersTotal Outstanding Amount: 

₹1,62,961 crore as of March 31, 2025, reported by public sector banks to the Central Repository of Information on Large Credits (CRILC).

Data Source: 

The list of wilful defaulters (excluding foreign borrowers) is updated monthly and available on credit information company websites like CIBIL, Experian, Equifax, and CRIF High Mark.

High-Profile Cases: 

Notable wilful defaulters include Vijay Mallya, Nirav Modi, and Mehul Choksi, who have fled India to evade legal action.

Top Defaulters: 

The largest wilful defaulter as of March 2023 was Gitanjali Gems Ltd. (owned by Mehul Choksi), with unpaid loans of ₹8,516 crore. 

The top 50 defaulters collectively owed ₹87,295 crore.

Penal Measures:

No additional credit facilities from banks or financial institutions.

A one-year ban on fresh loans even after removal from the wilful defaulter list.

A five-year ban on starting new ventures or raising market funds.

Potential asset seizure under the Fugitive Economic Offenders Act, 2018.

Timeline of Wilful Defaulter Regulations in India -

1994: 

The RBI introduced measures to address loan defaults, including circulating names of defaulters above a threshold and publishing lists of borrowers against whom banks had filed suits. 

The Scheme of Disclosure of Information on Defaulting Borrowers was launched in April 1994.

1998: 

The Central Vigilance Commission (CVC) issued guidelines to improve vigilance in banks, instructing the RBI to collect information on wilful defaults of ₹1 crore and above.

1999: 

The RBI introduced a formal scheme for handling wilful defaulters, effective from April 1, 1999, outlining criteria for identifying wilful default.

2000: 

The Parliamentary Standing Committee on Finance highlighted wilful default as a major cause of non-performing assets (NPAs), emphasizing the need for clear definitions and actions.

2002: 

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act was enacted to aid recovery of bad loans, with provisions for asset seizure in cases of default.

2015: 

The RBI issued a Master Circular on wilful defaulters (July 1, 2015), consolidating guidelines and defining the process for identification and penal actions.

2016: 

SEBI introduced regulations barring companies with wilful defaulters as promoters or directors from accessing capital markets.

2018: 

The Fugitive Economic Offenders Act was enacted, enabling asset seizure and barring defaulters from pursuing civil cases in Indian courts.

2019: 

The Finance Ministry reported that nationalized banks had filed suits in 8,121 cases and initiated action under SARFAESI in 6,251 cases. FIRs were registered in 2,915 cases against wilful defaulters. Recoveries of ₹7,654 crore were made between 2014 and 2019.

2020: 

The government informed Parliament that 38 wilful defaulters, including Vijay Mallya, Nirav Modi, and Mehul Choksi, had fled India between 2015 and 2019.

2023:June: 

The RBI issued a circular on compromise settlements and technical write-offs, addressing wilful default and fraud cases.

September: 

The RBI released a draft Master Direction on the treatment of wilful defaulters, updating procedural safeguards in line with the Supreme Court’s ruling in Jah Developers (emphasizing natural justice and due process).

2024:July: 

The RBI issued new norms effective November 1, 2024, requiring lenders to examine wilful defaulters in all NPA accounts with outstanding amounts of ₹25 lakh and above within six months.

December: 

The RBI rejected banks’ requests for more time to classify wilful defaulters, enforcing the six-month timeline to prevent asset value decline.

2025:March: 

Public sector banks reported 1,629 wilful defaulters with ₹1.62 lakh crore in outstanding loans.

July: The Finance Ministry, responding to Parliament, confirmed the 1,629 defaulters and outlined measures like asset seizures (₹15,298 crore under PMLA, ₹750 crore under FEO Act) and recoveries of ₹25,806 crore in bank fraud cases.

Challenges and ConcernsProcedural Safeguards: 

The Jah Developers case (Supreme Court) emphasized the need for fair procedures, including proper documentation, evidence, and opportunities for borrowers to respond. 

The RBI’s 2023 draft Master Direction aimed to address these concerns.

Delays in Classification: 

Borrowers often delay proceedings, prompting the RBI to enforce a six-month timeline for classification.

High-Profile Fugitives: 

Cases like Vijay Mallya and Nirav Modi highlight challenges in pursuing defaulters who flee India, despite measures like the Fugitive Economic Offenders Act.

Impact on NPAs: 

Wilful defaults contribute significantly to India’s NPA crisis, straining the banking system. The Joint Parliamentary Committee (2018) recommended stricter actions, special courts, and better due diligence by banks.

Reputational Damage: 

The wilful defaulter tag severely impacts the reputation of individuals and companies, often leading to exclusion from financial markets.

Examples of Notable Defaulters

Gitanjali Gems Ltd. (Mehul Choksi): Largest defaulter as of March 2023, with ₹8,516 crore in unpaid loans.

Era Infra Engineering: ₹5,750 crore in dues.

REI Agro: ₹5,148 crore in dues.

ABG Shipyard: ₹4,774 crore in dues.

Infrastructure Group Chairman and Son: Declared wilful defaulters for ₹164 crore, with evidence of fund 

Legal Consequences: 

Wilful defaulters are barred from participating in the insolvency resolution process under the Insolvency and Bankruptcy Code, 2016, and from raising funds through capital markets (SEBI regulations)

Government and RBI ActionsAsset Seizure: 

Under the PMLA and FEO Act, assets worth ₹15,298 crore and ₹750 crore, respectively, have been seized.

Recovery Efforts: 

₹25,806 crore returned to banks in fraud cases.

Stricter Norms: 

The RBI’s 2024 norms mandate faster classification and transparency, with public disclosure of defaulters’ names and photographs (per board-approved policies).

Legal Framework: The SARFAESI Act, IBC, and FEO Act provide mechanisms for recovery and penalties

What type of law we need ?

A Single Law That Ends Loan Abuse

- Permanent ban on taking new loans, once default is confirmed.

- Immediate prohibition from leaving India until full recovery.

- Permanent blacklisting from accessing any bank (public or private).

- Mandatory imprisonment until government auctions properties and recovers dues.

- Full family placed under financial scrutiny—monthly check-ins at police stations. If hidden assets are disclosed voluntarily, monitoring is lifted.

One well-enforced law can solve this chronic issue and restore financial discipline nationwide.