In the absence of such details, banks were hamstrung in taking action to prevent defaulters from flying out of the country.

 

In order to improve vigilance and prevent economic offenders from leaving India, the Ministry of Corporate Affairs (MCA) has come up with a plan to seek passport details of all individuals having a Director Identification Number (DIN) or seeking a new DIN and a loan borrower of Rs 50 crore.

The MCA is primarily concerned with the administration of the Companies Act 2013, the Companies Act 1956, the Limited Liability Partnership Act, 2008 and other allied Acts and rules and regulations framed there-under, mainly for regulating the functioning of the corporate sector.

Although the Ministry of Finance has already issued guidelines directing banks to collect passport details from loan borrowers of Rs 50 crore and more, the MCA’s plan to collect passport details from DIN holders or new DIN seekers, is still a proposal and is likely to be made mandatory soon.

Sources said that the submission of passport details will be mandatory for DIN holders as well as for the prospective DIN seekers from July this year. The step has been taken to prevent economic offenders from running away out of the country.

“The MCA has made a plan to improve vigilance and for that, the MCA will collect passport details of the individuals holding DIN or seeking a new DIN. The notification making the submission of passport mandatory will be issued soon,” a source close to the MCA told The Sunday Guardian.

“The DIN application form will be modified to include the passport details column in it. Also, in case, if any director holding a DIN does not have a passport, then he or she will have to furnish an affidavit,” the same source cited above said.

Director Identification Number (DIN) is a mandatory requirement for all existing and new directors (or proposed directors) of a company. A DIN is issued in accordance with the directions provided by the amendment to the Companies Act 2013. It is an 8-digit Unique Identification Number allotted to all directors. It has lifetime validity. The DIN provides a unique identity to the director and helps in maintaining information of all directors in a database.

Passport details in the digital warehouse will help authorities take timely action and check fraudsters from fleeing the country. In absence of passport details, banks were hamstrung in taking timely action to prevent defaulters from flying out of the country.

Earlier, the Ministry of Finance had instructed all banks to collect the passport details within 45 days from the borrowers who have taken loan of over Rs 50 crore in the past.
The ministry believes that the passport details of debtor will reduce the chance of a fraudster leaving the country after committing an economic offence.
The Ministry of Finance has told the banks that if the borrower does not have a passport, then the bank will affirm that the borrower does not have a passport. Banks were also asked to change the loan application form and include passport details column in it.

After witnessing criticism for its failure to prevent bank frauds, the Centre has come up with several measures including passing the Fugitive Economic Offenders’ Bill, to prevent economic offenders from fleeing the country.

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