Mehul Choksi’s Rs 5693 Cr Scam Is India’s #1 Fraud; Dues From Top 100 Defaulters Rise To Rs 84,632 Crore

According to the data shared by RBI in response to an application under the Right to Information (RTI) Act, in FY20 total dues of top 100 wilful defaulters amounted to Rs 80,344 crore 84,632 crore. This is a rise of 5.34% from the total dues as of March 2019, which stood at Rs 80,344 crore.

According to the data from RBI, Gitanjali Gems, Winsome Diamonds & Jewellery and Kingfisher Airlines are in the top 10 defaulters who account for 32% of total dues.

In order to clear their balance sheet and get tax benefits, the banks have written off nearly three-fourths of it. People familiar with the matter told the publication said that these defaulters continue to be in the internal CRILC database of RBI.

The Dues :-

Topping the wilful defaulters’ list is Mehul Choksi’s Gitanjali Gems with dues of Rs 5,693 crore. Next in the list is REI Agro with Rs 4,403 crore. With a due of Rs 3,375 crore Jatin Mehta’s Winsome Diamonds & Jewellery comes next.

Others in the list of top 10 wilful defaulters include another jewellery maker Forever Precious Jewellery, and Vijay Mallya’s Kingfisher Airlines.

As per the data showed by RTI activist Biswanath Goswami,  as on March 2020, Punjab National Bank had the highest exposure to Gitanjali Gems with Rs 4,644 crore of non-performing assets (NPA).

An exposure of Rs 1,447 crore to Gili India and Rs 1,109 crore to Nakshatra Brands is what PNB has.

From the top 10 wilful defaulters, State Bank of India had Rs 1,875 crore dues whereas Uco Bank had Rs 1,970 crore exposure to REI Agro. Half of the amount defaulted by REI Agro has been written off.

Write-offs:-

Shifting NPAs from active balance sheet to off-balance sheet accounts, is done through accounting entries called as write-offs.

These are backed by 100% provision and therefore any recovery from these accounts adds to net profit. The data on defaults from the banks is collected weekly by RBI whereas the credit data is collected monthly. The regulator has mandated banks to provide fully against NPAs older than four years and allowed to write these old NPAs off. RBI had said in its latest report on Trend & Progress of Banking in India during FY20, the reduction in NPAs was largely due to writeoffs.