Government plans to introduce stricter law to seize assets of major loan defaulters | Photo Credit: BCCL

New Delhi: In the wake of rising bank frauds and loan default cases in the country, the Union Cabinet is expected to discuss on Thursday the possibility of introducing a new law for confiscating assets of major defaulters who have fled the country with unpaid dues of over Rs 100 crore, reported The Times of India. The Cabinet is also expected to propose a revamp in the regulatory regime for Chartered Accountants (CAs) and Auditors. The report, quoting sources close to the development, said the government has already started working on a strict legislative framework for major defaulters.

PNB fraud case probe: Blue Corner notice issued to locate 'wilful defaulters' Nirav Modi, Mehul Choksi

However, the degree of action under the newly proposed law has not yet been determined, as per the report. In addition, the government is also considering other steps that are likely to be discussed today.

While talks to set up the National Financial Reporting Authority for overseeing disciplinary functions of Institute of Chartered Accountants of India were initiated earlier, a decision on the matter has currently been deferred. The Cabinet is expected to at least strengthen the regulatory framework for keeping a tab on operations conducted by Chartered Accountants.

The new regulatory frameworks for the banking sector and Chartered Accountants are being mulled in the wake of the fraud a Rs 12,700 crore fraud at Punjab National Bank (PNB), where diamantaires Nirav Modi and his uncle Mehul Choksi have been named as key accused. Both of them have fled the country and Modi has denied CBI's request to join the probe.

At present, all major banks in the country have been asked to increase internal vigilance and keep a tab on non-performing assets (NPAs) ranging from Rs 50 crore to Rs 250 crore. The major fraud has not only dented the government's plan to recapitalise banks but also impacted other jewellery businesses in the country.

Nirav Modi denies joining probe in PNB scam case, informs CBI

Meanwhile, a Blue Corner notice has been issued against alleged 'wilful defaulters' Mehul Choksi and Nirav Modi by the Bureau of Immigration to locate their whereabouts. The development comes after Modi denied coming to India to join the probe. In his reply to the investigative authorities, Modi said he has other businesses to manage outside India and that he would not be able to return.

There have been several cases where defaulters have escaped the country without out any intention to return. Apart from the PNB fraud, the case of Vijay Mallya is another stark example of a wilful defaulter, who fled the country after defrauding a consortium of 17 banks.