In the last few years, there have been several cases of fraud and money laundering. Various popular businessmen have been caught in this. In order to prevent this, Passport details of borrowers taking loans of Rs 50 crore and more have been mandatory to ensure a swift action in case of fraud and prevent fraudsters from fleeing the country, one of the Top Official said.
Passport details will help the banks in order to take immediate actions and inform concerned authorities to prevent all the fraudsters from fleeing the country.
This new step has been taken in order to ensure quick response in case of fraud, said Secretary Rajiv Kumar on Micro-Blogging Website, Twitter. He also said this new step is to avoid the flight of economic offenders and banks to correct passport details of all new borrower of loans of Rs 50 and more. For all existing loans of over Rs 50 crore, banks have been requested to collect passport details of borrowers within 45 days, he added.
In absence of the Passport details, banks were not able to take timely action in order to prevent defaulters, especially deliberate one from fleeing the country. Some of the big defaulters such as Nirav Modi, Mehul Choksi, Jatin Mehta and Vijay Mallya have fled the country while putting the recovery mechanism in quandary.
In the previous week, the Cabinet has certified the Fugitive Economic Offenders Bill after Nirav Modi and his uncle Mehul Choksi have apparently defrauded state-owned Punjab National Bank (PNB) of Rs 12,700 Crore and have left the country and then they are refusing to cooperate with the law enforcement agencies.
The currently released fugitive law also aims to impound and sell assets of Nirav Modi-type escapees in order to quickly recover dues. This law is also applicable to all the defaulters who have taken a loan of Rs 100 or more and then escaped from the country.
In order to maintain clean and clear banking system, Finance Ministry Last week has directed all the public sector banks to investigate all NPA accounts of over Rs 50 Crore for possible fraud and then report all the cases to CBI if needed.
Lastly, the ministry had also requested all the banks to monitor loans above Rs 250 crore and provide red-flags whenever the original covenants of the loans are violated. This new decision was being carried out as a part of 6-point reform measures which were declared for PSBs in January.
Due to above reasons, Passport Details must for Loans of Rs 50 Crore and above. Thus, all the Public Sector Banks should keep these things in mind before giving a loan to any person.