Can there be a Look Out Notice/Circular against wilful defaulter in repayment of loan?

Kapil Chandna | Last updated: 22 May 2021

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Following significant financial frauds, the Indian government empowered bank CEOs to issue Look Out Circulars (LOCs) against wilful defaulters and fraudsters, even before FIRs are filed. This measure aims to prevent individuals from fleeing the country and ensure loan repayment. A wilful defaulter is defined by the RBI as someone who intentionally defaults on payments, diverts funds, siphons them off, or disposes of secured assets without lender knowledge. If an LOC is issued, individuals can appeal to the High Court to have it quashed or seek permission to travel abroad for specific reasons, provided they offer assurances of return.

Yes, the Indian Government on 22ndNovember 2018 through the MHA circular, has empowered the CEOs of public sector banks to request look-out circulars/notice against wilful defaulters and fraudsters even before FIRs are filed against them. The recommendation had been part of the committee headed by financial services secretary Rajiv Kumar as a step towards the clean banking drive by the government. The home ministry has also issued two circulars, authorising chairman-cum-managing directors or

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Kapil Chandna

Expert Bail & Criminal Defence

Chandna Chandna Associates Team of dedicated, hardworking, experienced, and passionate lawyers to represent clients at Patiala House Courts, Rouse Avenue Court, Saket District Court, Dwarka District Courts, Tis Hazari, Karkardooma, Rohini District Court, Delhi High Court, Supreme Court of India, and all High Co ... Read more

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