India regulator gets tough on 'wilful defaulters'

India's market regulator Saturday announced a clampdown on "wilful defaulters" as the government tackles mounting bad bank loans, days after tycoon Vijay Mallya left the country owing more than $1 billion.

Under Indian law, business-owning individuals or firms can be declared wilful defaulters if they deliberately do not pay their debts despite having adequate cash flow or assets.

In future they will be barred from raising fresh funds by issuing securities on capital markets and from sitting on the boards of listed companies, the Securities and Exchange Board of India (SEBI) said.

"Any company who is declared wilful defaulter will be barred from raising fresh money from the day SEBI notifies the new rule," the regulator's chairman UK Sinha told reporters in New Delhi.