The government is mulling amendments to the Passport Act to prevent economic offenders who pose a “financial risk to the country” from fleeing, according to a senior government official.
A committee headed by Financial Services Secretary Rajiv Kumar was formed to tighten laws to prevent loan defaulters from fleeing the country. The panel comprised members from the Ministries of Home Affairs and External Affairs, Enforcement Directorate, Central Bureau of Investigation, Intelligence Bureau and Reserve Bank of India and has submitted its suggestions to the Home Ministry.
The move assumes significance as India is trying to bring back defaulters like Vijay Mallya, Mehul Choksi and Nirav Modi, who fled the country before the law enforcement agencies could act against them.
Amendments Proposed to Stop Offenders From Fleeing
The committee has suggested amending the Act to ensure that whenever there is financial risk to the banking sector, defaulters are asked to participate in the resolution of that loan, said the official quoted earlier.
The official said the amendment will lay out a “well-defined criteria based on reasonable classification of financial risk”. He said the risk would be based on a specific amount and the nature of diversion of funds. This would be defined once the amendment is cleared, the official said.
The amendments will prevent an offender from leaving the country by issuing a look-out notice. It will also authorize banks to inform enforcement agencies about such offenders once they meet the criteria, the official said.
After the Rs 13,000-crore Punjab National Bank fraud involving diamantaire Nirav Modi early this year, the Finance Ministry had asked public sector banks to collect the passport details of those who have borrowed over Rs 50 crore.
The amendments would not obstruct a citizens’ right to movement, as protected in Article 21 of the Indian Constitution, the official said
(This story was originally published on BloombergQuint.)
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