RBI submits list of big defaulters to SC, but pleads to keep the names secret

Regulator cites adverse impact to business and employees as reasons, according to a report in The Times of India

A list of big defaulters, who failed to repay loans of over Rs 500 crore, was submitted to the Supreme Court by the Reserve Bank of India on Tuesday, a report in The Times of India said.  However, the banking regulator pleaded not to make the names public, citing adverse impact to business and affecting many employees, the report adds. 

"Disclosing details of accounts where defaults have been found, irrespective of the reasons for no-repayment, may have adverse impact for business and in a way may accentuate the failure of business rather than nursing it back to health,” the central bank told the apex court in its affidavit submitted along with the list of defaulters. 

The banking regulator said that defaults have happened due to many reasons, and in some cases, even when the borrower had the best of intent, the newspaper reported. 

Delayed permissions from government and regulators, delays in land acquisition and loans, downturn in business cycle, among others, are reasons for default, the RBI said. 

"Disclosure of names of defaulters may have an impact on the livelihood of scores of employees employed in such entities,” the central bank said. It also added that making the names public would defeat the purpose of fiduciary (a relationship involving trust) responsibility for banks.  

“Disclosing personal information which is fiduciary in nature with regard to banks by a statutory body would defeat the very purpose of having fiduciary responsibility on the part of banks. For these reasons, it is extremely necessary to keep the confidentiality of the information provided along with this affidavit”, the RBI said. 

The Supreme Court, had on February 16, demanded a list of big defaulters while hearing a Public Interest Litigation (PIL) filed by an NGO, Center for Public Interest Litigation. It had alleged a significant rise in non-performing assets (NPAs) of public sector banks due to regular waivers and restructuring of loans. 

The central bank, in its response to the court’s query, said that the write-offs of NPAs by banks was a regular exercise to clean up their balance sheets, a report in Hindustan Times states. “Substantial portion of write-offs is however, represented by technical write off which is primarily intended at cleansing the balance sheet and achieving taxation efficiency,” it added. 

A recent report in The Indian Express had pegged the write-offs by 29 state-run banks at Rs 1.14 lakh crore between financial years 2013 and 2015.