Bombay Rayon on RBI’s wilful defaulters’ list

Central Bank of India has referred to Bombay Rayons

Fashions to Reserve Bank of India ‘wilful defaulters’. The bank has sent a legal notice to Bombay Rayon which has defaulted on payment of loan amounting to Rs 4,055 crores that was lent to them. The notice was issued after the textile company refused to allow the bank to conduct a forensic audit of its books.

Central Bank, to which the company owes around Rs 100 crores has intimated other lenders that it suspects Bombay Rayon has the resources to repay the loan but is not doing so wilfully. The public sector bank is also likely to send a notice to the Mukul Kasliwal-controlled infrastructure and energy company Entegra, asking it to explain why it has failed to repay Rs 150 crores for the last two years. Both Entegra and Bombay Rayon will have to respond within a 60-day notice period. If the reply is satisfactory, the bank will give them a hearing; else, both companies will be labelled as wilful defaulters.

A borrower who fails to repay a loan, despite having the capacity to do so or diverts the borrowed money can be declared a wilful defaulter. Such a declaration takes place, only after many rounds of consultations and after he has been given adequate time to explain his position. The bank submits the details of wilful defaulters to the RBI every three months.