Major PSU banks issue over 1000 Look-Out Circulars against loan defaulters in 5 years
In an effort to recover dues from fugitive borrowers, six large public sector banks have collectively issued more than a thousand Look-Out Circulars (LOCs) against wilful loan defaulters over the past five years, according to data obtained from Right to Information requests.
Leading the pack is State Bank of India (SBI), the nation’s largest commercial bank, with 583 LOCs issued against absconding customers as per their response. Other major lenders such as Union Bank of India with 260 LOCs and Punjab National Bank with 131 circulars followed suit in hopes of restricting foreign travel of big-time defaulters who owe them massive sums.
Smaller but significant numbers of LOCs were also reported by Indian Overseas Bank (42), Bank of India (42), Central Bank of India (13) as these six banks combined to take action on over 1071 errant borrowers through alerts to immigration authorities since 2018.
The LOCs in question pertained only to the ‘wilful default’ category as classified by the banks, where borrowers have shown no intention of repaying loans despite having the means or have misused funds. Currently over 17 thousand such accounts involving a whopping Rs. 3.5 lakh crores are on the wilful defaulter list of these lenders.
While the LOC moves aim to prevent a repeat of cases where big borrowers fled the country after racking up billions in debt, recent Bombay High Court orders have substantially weakened the validity of these bank-initiated travel restrictions and barred non-state actors from directly issuing such advisories. Nonetheless, recovering taxpayer money remains a priority even if through alternative lawful means.
