Supreme Court order opens way for naming more wilful corporate defaulters

Recently, Kolkata-based public sector lender UCO Bank published the name of Yashovardhan Birla as a wilful defaulter

Banks are looking to intensify the drive to name and shame more wilful corporate defaulters.
 
This has come after the Supreme Court last month said a person had no right to be represented by a lawyer in in-house proceedings initiated by banks or financial institutions to declare him or her a wilful defaulter.
 
Recently, Kolkata-based public sector lender UCO Bank published the name of Yashovardhan Birla, along with his photograph, in newspapers as a wilful defaulter because of his firm Birla Surya failing to repay Rs 67.65 crore.
 

Birla is director of Birla Surya and chairman of the Yash Birla Group.

 
Banks were earlier reluctant to do this owing to apprehensions that there might be legal consequences.However, with the Supreme Court order, banks have said there is clarity on the matter.
 
Atul Kumar Goel, managing director and chief executive officer (MD and CEO), UCO Bank, told Business Standard the bank was considering more names for publication. So far it has published 500-600 names, and about 200 names, including the names of corporate defaulters, would be put out.
 
Ashok Kumar Pradhan, MD and CEO of United Bank of India, said six to eight months ago the bank’s board decided not to publish any name. However, now, with the clarity in law, the bank will review the decision. Mrutyunjay Mahapatra, MD and CEO, Syndicate Bank, said the bank would publish the names of corporate defaulters. A decision on this has to be taken at the highest level, given the sensitivity of the issue.

 
In September 2016, the Reserve Bank of India (RBI) said some lending institutions were indiscriminately publishing the photographs of defaulters/guarantors in newspapers. It said a lending institution could consider publishing the photographs of only the borrowers declared wilful defaulters, following the mechanism set out in the RBI instructions of July 2015.
 
The instructions talk about committees to be set up by banks on this. One would declare the names of wilful defaulters, and the other would review the decision of the first committee in the case of a dispute.