(Reuters) - Kemrock Industries and Exports (KEMR.NS) owns a golf course near its plant in western India and its chairman, Kalpesh Patel, talks of the high salaries he pays employees.
Still, the company has defaulted on payments for about $250 million (152.9 million pounds) in loans and Patel's banks, frustrated that they are unable to seize assets as he fights them in court, say they want to declare him a "wilful defaulter", a fast-growing category in India as bad loans mount.
Patel firmly denies he is such a case, saying that the business has hit lean times but he is working to turn it around.
The prevalence of so-called "wilful" defaults is symptomatic of what critics say is a loose credit culture that plagues Asia's third-biggest economy, keeping underperforming companies in business, crowding out other borrowers and leaving taxpayers on the hook to recapitalise state banks.
The Reserve Bank of India defines a wilful defaulter as a borrower that is able but unwilling to pay, has diverted loan proceeds for other than their initially stated use, or has overstated profits in order to obtain a loan.
Policymakers have voiced growing about the problem in recent months, and are urging banks to get tough.
"In India, there is no stigma attached to defaulting on bank loans," said Sharad Bhatia, president, stressed assets management, at Axis Bank (AXBK.NS), India's No.3 private sector lender, which has filed a lawsuit against Kemrock in the western city of Ahmedabad in an effort to seize assets.
"The defaulters' ability to manage the system is much better than banks so they can get away easily."
State-run Allahabad Bank (ALBK.NS) is also owed money by Kemrock and said it was trying to get it declared a wilful defaulter.
Analysis - As bad loans mount, India gets tough on 'wilful' default| Reuters
Still, the company has defaulted on payments for about $250 million (152.9 million pounds) in loans and Patel's banks, frustrated that they are unable to seize assets as he fights them in court, say they want to declare him a "wilful defaulter", a fast-growing category in India as bad loans mount.
Patel firmly denies he is such a case, saying that the business has hit lean times but he is working to turn it around.
The prevalence of so-called "wilful" defaults is symptomatic of what critics say is a loose credit culture that plagues Asia's third-biggest economy, keeping underperforming companies in business, crowding out other borrowers and leaving taxpayers on the hook to recapitalise state banks.
The Reserve Bank of India defines a wilful defaulter as a borrower that is able but unwilling to pay, has diverted loan proceeds for other than their initially stated use, or has overstated profits in order to obtain a loan.
Policymakers have voiced growing about the problem in recent months, and are urging banks to get tough.
"In India, there is no stigma attached to defaulting on bank loans," said Sharad Bhatia, president, stressed assets management, at Axis Bank (AXBK.NS), India's No.3 private sector lender, which has filed a lawsuit against Kemrock in the western city of Ahmedabad in an effort to seize assets.
"The defaulters' ability to manage the system is much better than banks so they can get away easily."
State-run Allahabad Bank (ALBK.NS) is also owed money by Kemrock and said it was trying to get it declared a wilful defaulter.
Analysis - As bad loans mount, India gets tough on 'wilful' default| Reuters
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