Defaulters who took Loans from the banks are using their children to avoid loan and punishments. Well, as the forensic reports suggest that the banks are unable to extract loans from them because till the time they come to know about it, the money is transferred into foreign Account in the name of children.
Many reports in the media, without naming any company suggest that infrastructure defaulters are utilizing this kind of tactic to avoid paying the loan. Their business, which was always to earn money from the taxpayer’s fund is successfully managed through a large and complex network of banks touts, middlemen and informers who help the companies avoid paying loans.
Vijay Mallya’s company Kingfisher is a recent and perfect example of this kind of tactics employed by many businesses, who do not wish to spend rest of their life in jail after being caught for not paying loans.
They transfer their immovable assets in the names of the minor thus stopping the banks to auction off their assets and declare themselves bankrupt. The children become the perfect hiding tool for the company against whose insolvency proceedings are going on.
The Banks & Loans
Banks employ the forensic company and risk consulting firms to search for the way and means to recover funds from the defaulters but the defaulters are smart enough to know the system and perfect an easy plan to save their assets being auctioned off.
Many promoters employ their parents and minors who do not have to file a tax return, to buy the property from the loans sanctioned against the name of the business. The forensic team experts say that they trace the social media profiles of the children and family to analyze the issue of the loan being used in private use.
Most of the promoters bought the real estate in New Delhi, Gurgaon and Mumbai in the name of the minor. While many companies also hide their assets and stress their loan to see themselves out of the banks reach.As the NPA of the banks grows continuously without any sign of reduction, it is the most pertinent question to be asked by the government.
Defaulter’s Game Plan
The banks which show a quick response in the seizing the property of the small and medium-sized enterprises forget their basic functions in front of the large corporates. It is nothing more than a nexus between corporates and banks to loot the public money.
While the government continues infusing a large amount of capital in the banks, it remains to be seen how the banks are able to recover themselves from such bad loans. Banks have begun taking help of the forensic firms to know the details of the promoters and their assets. This helps the banks in extracting their loans, which seem to be lost in the complex web of the promoter’s family and friends.
The need for the stringent law has become much more clear because of the current conditions of the defaulters, who unwilling to pay their loans easily. In this case, it is not the small business owners but the large and big corporates who are misusing the system to their benefits.