Loan Defaulters to Face Tougher Action

The culture of impunity to the loan defaulters may end with an amendment to law initiated to slap a travel ban on the persons concerned is on the cards.

Although loan default takes a heavy toll on the country and its people, defaulters are always unmoved.

To pull the bridle, Finance Ministry has prepared a revised draft of the Bank Company Act to preclude willful defaulters from holding director posts in any banking and non-banking financial institution and traveling abroad.

Such a ban will be in force for a maximum of five years after their exemption from loan defaulting stigma, sources said.

As per previous law, loan defaulters were not entitled to travel abroad in the business class, but the draft instrument has stringent provisions.

The defaulters will be disqualified to have their properties including homes, cars, and companies registered.

Besides, the loan defaulters will be socially cornered as the upcoming law will not allow them to attend any social and state program.

Sources said the draft law will be sent to the cabinet committee for approval.

Experts say that defaulted loan has manifold socioeconomic impacts as it creates scope for a liquidity crisis, money laundering and imbalanced business competition and overall economic loss.

The apex court earlier heavily came down upon loan defaulters and it passed a ruling not to allow them to contest any polls and enjoy other facilities.

Economists stressed regularisation of loan distribution and recovery, political goodwill and combined efforts of all concerned to resolve the crisis.