A government panel has recommended amending the Passport Act to prevent borrowers from fleeing the country.
If the recommendations are accepted, it will be a step towards ensuring that large borrowers are held accountable for non-payment of loans to banks and cannot flee the country without paying their dues.
The government has already enacted the Fugitive Economic Offenders Law to ensure that the fugitives return to the country to face prosecution. The law empowers confiscation of all assets both within and outside the country for all offences where the monetary value of the offence exceeds ₹100 crore.
The proposal to amend the Passport Act, 1967 comes at a time the government is struggling to bring back fugitives like jewellers Nirav Modi and Mehul Choksi and former liquor baron Vijay Mallya to stand trial in the country.
“The recommendations include amendment in Passport Act, 1967 to ensure that over a reasonably prescribed limit, wherever there is a financial risk in a particular (loan) account, the borrower will be asked to participate in the resolution of the account, and stop them from fleeing the country,” a senior government official said.
The official added that the government will prescribe a threshold for the loan default, beyond which the lenders will be empowered to alert enforcement agencies as per the provisions in law.
The government panel is headed by Rajiv Kumar, secretary, Department of Financial Services in the ministry of finance. Other members of the panel include representatives from Enforcement Directorate, Central Bureau of Investigation, Reserve Bank of India, Home ministry and ministry of external affairs. The panel was set up after increasing instances of bank frauds were unearthed, with enforcement agencies unable to prevent the defaulters and fraudsters from fleeing the country.
In February, a ₹14,356 crore scam surfaced at Punjab National Bank involving Modi and Choksi. Both were accused of colluding with PNB employees to secure letters of undertaking fraudulently, that were then used by the jewellers to seek loans from other banks.
Choksi has been traced to Antigua and India is working out the modalities with the government there for his extradition. In the case of Modi, India has sent a extradition request to the UK. Mallya has also been tagged as a wilful defaulter and accused of money laundering, with India struggling to bring him back from the UK.
According to data collated by the external affairs ministry, 28 Indians involved in financial irregularities had fled the country in the period between 2015 and 30 June 2018. The list was compiled by the Central Bureau of Investigation and Enforcement Directorate (ED), and includes names like Mallya, Modi and his brother Neeshal Modi, Choksi and Lalit Modi.