Usha Ispat Top Defaulter, Kingfisher 9th on RBI List: Newslaundry

Newslaundry reveals RBI’s list of defaulters, claims “public money at stake”.

4 min read

At a time when the country’s apex court is pulling up the central bank, the Finance Ministry and the Indian Banks Association on the staggering levels of bad loans, says it has accessed the Reserve Bank’s list of defaulters whose combined loan value stands at Rs 5 lakh crore as of 25 December 2015.

So far, the list reveals the names of the top 10 corporate defaulters – both wilful and otherwise. The list is of defaulters includes those against whom there is no legal action yet – non-suit filed cases in banking parlance.

The Quint could not independently verify the claims made by the news website.


Metal Companies Dominate List of Defaulters; LIC, PSBs Key Creditors

Companies from the metal and mining sector feature prominently in the list. Newslaundry claims, “The owners of these companies — like Usha Ispat, Malvika Steels, Lloyds Steel and Prakash Industries — have seemingly benefited from political and regulatory forbearance when it comes to their debts.” Most of the key creditors include Life Insurance Corporation of India (LIC) and public sector banks.

Here is the list at a glance:

1. Usha Ispat (Metal & Mining): The company has an outstanding loan amount of Rs 16,911 crore, of which Rs 5,093 crore constitutes wilful default. LIC is the main creditor. The current status of the company is non known. Trading in the company’s shares has been suspended since 2007.

2. Lloyds Steel (Steel sector): This listed company’s outstanding loan amount is Rs 9,478 crore, of which Rs 6,309 crore amounts to wilful default. Yes Bank is the key creditor. The company has been acquired by the Uttam Galva Group.

3. Hindustan Cables (Telecom cables): Outstanding loans stand at Rs 4,917 crore and Bank of India is the key creditor. The unlisted company is currently being wound up.

4. Hindustan Photofilms MFG (Photo films): The outstanding loan amount stands at Rs 3,929 crore. LIC is the key creditor. The company is unlisted and has been wound up.

5. Zoom Developers (Real Estate): Outstanding loans stand at Rs 3,843 crore, out of which Rs 137 crore is labelled as wilful default. Oriental Bank of Commerce is the key creditor. RBI pegs the current status of the company as unknown.

6. Prakash Industries (Mining, Steel and Power): Outstanding loan amount is to the tune of Rs 3,665 crore of which Rs 2,233 crore is pegged as wilful default. The company is still listed on the bourses and LIC is the main creditor. The company is still operational.

7. Operational Cranes Software International (IT sector): Outstanding loans stand at Rs 3,580 crore. Again, a majority of that amounts to wilful default - Rs 2505 crore. It’s listed on the Bombay Stock Exchange (BSE) and Bank of India is the key creditor. The company is still operational.

8. Operational Prag Bosimi Synthetics (Textile): Outstanding loans amount to Rs 3,558 crore. It’s a listed company and IDBI Bank is the main creditor. The company is still operational.

9. Kingfisher Airlines (Aviation): RBI’s list pegs the outstanding loan amount at Rs 3,259 crore and put Punjab National Bank as the main creditor.

10. Malvika Steel (Steel sector): Outstanding loan amount is pegged at 3057 crore and GIC is the key creditor. The company has been closed since.

Key Anomalies in the List

1. Zoom Developers

In the case of Zoom Developers, Newslaundry says questions how the amount labelled as wilful default stands at only Rs 137 crore.

Zoom Developers owner Vijay Chaudhary was charged by the Enforcement Directorate for diverting bank loans for realty projects in Europe and according to some accounts, he has been absconding since 2014. Zoom features on CIBIL’s list as the top-most wilful defaulter (suit-filed accounts).
Newslaundry Report

2. Kingfisher Airlines

Kingfisher only features 9th on RBI’s list of defaulters. The Mallya-owned company’s outstanding loan amount is reportedly around Rs 7,000 crore but the RBI’s list pegs it at Rs 3,259 crore. The defunt airline has been declared a wilful defaulter by various banks but features on the RBI list as just a defaulter. Also, KFA’s largest creditor is the State Bank of India to the tune of Rs 1,600 crore.

Newslaundry says it had sent a detailed questionnaire to all the companies named in the story but none of them responded. It had also reached out to the RBI spokesperson for a comment.


Rationale for Making the List Public?

It’s worth noting that the RBI has urged the Supreme Court to not make the list of loan defaulters public and the matter is still being heard. The central bank has said that disclosing their names may have “adverse impact” on business and may “accentuate failure of business”. It is also not established practice anywhere in the world to make public the list of bank defaulters.

But Newslaundry claims the rationale for revealing the list is that “public money at stake” – since the the banks involved are state-owned and many of the companies are public sector undertakings or firms with promoters with some political connections.

You can read the full Newslaundry article here.

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