The heads of public sector banks can now request look-out circulars to be issued against wilful defaulters from fleeing India, according to a senior government official.
Empowering bank chiefs will help them obtain the circular – which is used by law enforcement agencies to stop offenders from fleeing the country – from the Ministry of Home Affairs in cases where a First Information Report is yet to be filed, the official told reporters.
A committee headed by Financial Services Secretary Rajiv Kumar has recommended amending a circular of Ministry of Home Affairs which lists authorities who can request issuance of the look-out circular to the MHA, the official said.
The development comes as businessmen such as the founder of the now insolvent Kingfisher Airlines Vijay Mallya and diamantaire Nirav Modi – who owe over Rs 9,000 crore and Rs 12,000 crore respectively to state-run lenders – reportedly left India before scandals involving them emerged.
According to the amendment, the circular now includes chairman, managing director and chief executive officers of public-sector banks.
The circular also includes authorities not below the rank of Deputy Secretary in Government of India, Joint Secretary in State Government, Superintendent of Police of District concerned, among others, and empowers them to request a look-out circular in the economic interests of the country.
Banks have been informed about the enhanced powers given to their chiefs in a communication by the Finance Ministry today, the official cited earlier said.
Banks will have to themselves lay out criteria to identify delinquent borrowers expected to leave the country and justify the grounds on which the look-out circular has been requested, the official said.
(This article was first published on BloombergQuint)
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