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It is no secret that India has seen a growing number of fugitive industrialists in recent times. These figures have been particularly high since the introduction of the Insolvency and Bankruptcy Code of 2016, which has made it easier for companies and individuals to default on their loans. This has been a cause of concern for the Indian banking sector, which is struggling to contain the losses caused by such defaults. But, who are these fugitive industrialists, and why have they defaulted on their loans? Here is a look at the issue and what needs to be done to address it.
Who Are the Fugitive Indian Industrialists?
Fugitive Indian industrialists are those individuals who are accused of financial irregularities or defaults in repayment of loans taken from banks. These are mainly large companies and their promoters, who have either failed to repay the loan amount or have diverted the loaned money for purposes other than the one for which it was taken. These individuals are on the run and are being pursued by the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED).
Why Have They Defaulted?
The primary cause of default is the inability to repay the loans taken from banks. This is usually due to the failure of the companies to generate sufficient revenue or profits, or due to the diversion of funds for other purposes. In some cases, the loans were taken for projects that proved to be unviable, leading to the inability to repay them. In other cases, the funds were diverted for personal use, leading to the default.
How Big Is the Problem?
The scale of the problem is quite large. According to recent estimates, the total amount of defaulted loans in India is estimated to be around ₹3 lakh crore. This figure is only expected to increase in the coming years. This has had a major impact on the Indian banking sector, with banks facing huge losses due to the defaults. This has also had a negative impact on the Indian economy.
What Needs to Be Done?
It is clear that the issue of fugitive industrialists and their default is a cause of concern that needs to be addressed. The government needs to take steps to ensure that such defaults are prevented in the future. This can be done by strengthening the legal and regulatory framework governing the banking sector, and by taking steps to ensure that the loans are used for their intended purposes. Additionally, banks need to be more vigilant in their lending practices to ensure that defaulting borrowers are identified and dealt with in a timely manner. Only then can the losses faced by the banking sector be reduced.
Conclusion
The increasing number of fugitive industrialists and their default is a cause of concern for the Indian banking sector. It has had a major impact on the economy, with banks facing huge losses due to the defaults. It is therefore important for the government to take steps to ensure that such defaults are prevented in the future. This can be done by strengthening the legal and regulatory framework governing the banking sector, and by taking steps to ensure that the loans are used for their intended purposes. Only then can the losses faced by the banking sector be reduced.
