The number of wilful defaulters has risen 60% during the last five years, government data shows.

Finance minister Nirmala Sitharaman told the Parliament there were 8,582 such defaulters in FY19, up from 5,349 in FY15.  Public sector banks had filed recovery lawsuits in 8,121 cases and recouped Rs7,600 crore so far.  What steps can banks take to check rising instances of default?

BIIA Member Kaushal Sampat, Promoter & Senior Advisor at Rubix Data published the following comment on LinkedIn: 

When wilful defaults have grown by Rs. 121,700 crores in 5 years and surged by Rs. 43,000 crores in the 12 months ended December 2018, the important of CreditRisk Assessment in India cannot be overstated. If a company is unable (or unwilling in the case of wilful default) to pay its lenders, the chances of the other creditors recovering all or part of their money is very bleak.

In the 2 decades that I have spent in the credit information business, I have come across so many CEOs and CFOs who say that they have been dealing with customers, distributors and dealers for so many years that they don’t need to do credit checks on them. I humbly disagree because I believe that a good payment track record in the past cannot be the SOLE predictor of timely payments in the future. In today’s volatile world, companies need to undertake credit assessments and monitoring of their customers on a continuous basis to prevent unpleasant surprises.

Source:  Rubix Data Sciences Private Limited