‘PSBs can seek LoCs against defaulters’

New Delhi: To check wilful defaulters and fraudsters from fleeing the country, the government has now authorised CEOs of public sector banks (PSBs) to make request for issuance of look-out circulars (LOCs) against suspects.

The move comes against the backdrop of defaults by Vijay Mallya, Nirav Modi and Mehul Choksi and thereafter, their fleeing the country.

The Ministry of Home Affairs (MHA) recently made changes in the circular by including CEOs of PSBs in the list of officials who can make request for issuance of LOCs to the ministry.

The inclusion by MHA was done following the recommendation of an inter-ministerial panel under Financial Services Secretary Rajiv Kumar that made a case for empowering the heads of PSBs to request for the opening of LOCs.

When asked about the changes made in the circular of MHA, Mr. Kumar said it was a continuation of the government’s clean-up drive of the banking sector.

Soon after the emergence of the PNB fraud and perpetrator Nirav and his uncle Choksi fleeing the country, the Finance Ministry asked PSBs to collect passport details of all those borrowers, who have borrowed loans of more than ₹50 crore.

This circular has empowered banks to take a decisive action against wilful defaulters and fraudsters by requesting for issuance of LOC by the concerned authority, thereby thwarting any move by them to flee the country, Mr. Kumar said.