The Reserve Bank of India has advised banks and financial institutions to 'seriously and promptly consider initiating criminal action against willful defaulters, wherever necessary, based on facts and circumstances of each case."

The action can be initiated under certain provisions of the Indian Penal Code to comply with the RBI's instructions and the Joint Parliamentary Committee's recommendations, the bank said in a notification in Mumbai on Saturday.

Banks need to ensure that penal provisions are used effectively but after careful consideration and due caution.

Banks and FIs have been advised to put in place a transparent mechanism, with the approval of their board, for initiating criminal proceedings and inform RBI about the actions taken.

Meanwhile, in Delhi, Finance Minister P Chidambaram told captains of Indian industry at an Assocham seminar that taxmen would soon swoop on corporates to recover the mounting undisputed tax arrears as part of efforts to meet the ambitious revenue target of over Rs 300,000 crore for this fiscal.

"If it (tax arrears) is undisputed and recoverable, then the money should be in my hands (government treasury) and not with you. It is a sizeable amount."

The government will collect these arrears 'like a bee extracts honey from a flower and if the flower does not yield honey, it (bee) will sting', he told Parliament earlier in the day.

To the Opposition charge that the Budget had over-estimated the revenue target, Chidambaram said he had made three additions to the projections of the National Democratic Alliance government's interim budget - recovery of undisputed tax arrears, education cess of 2% on all taxes and the Securities Transaction Tax.

These three new additional revenue mobilisation (ARM) measures would help the government to meet its revenue target, he said.

"I am confident that we will meet the revenue target. The target is not optimistic," he said adding it would be his responsibility to collect the revenue and keep fiscal deficit within 4.4% of the GDP during 2004-05.

Gross tax collection is estimated to rise by 25% to Rs 317,733 crore despite the relief given to the salaried class and agriculture sector.

Chidambaram ruled out rollback of service tax on aviation sector, saying, "Every service provider says that tax should be imposed on all services except his own. Everywhere in the world, airline services are taxed."

He also ruled out restoring of the exemption on leased aircrafts saying that it amounts to exporting of tax revenue under the double taxation avoidance treaty.

He said the tax is imposed on the lessor (foreign airline) and not on the Indian company leasing the aircrafts, which meant that the foreign company would be paying the tax in his country if there was no such tax here leading to denial of revenue to the developing country.

Also, the measure would promote Indian airline companies to acquire new aircraft instead of operating old leased aircraft.