No Reason For Secrecy On Bank Defaulters, Observes Supreme Court

The Supreme Court has once again asked the Reserve Bank of India why the list of defaulters with more than Rs 500 crore in dues should not be made public, while observing that it sees no reason for the secrecy.

The RBI had submitted the list of defaulters with more than Rs 500 crore in dues to the apex court in April but had requested the court to keep the list confidential. The RBI had argued that disclosing such details irrespective of the reasons for delay in repayment could have a "cascading effect" on the economy. It has also argued that under the Parliament's Secrecy Act, names cannot be made public.

The apex court, however, appears unconvinced. On Monday, the court once again asked why the list of defaulters should not be made public.

“Even if we disclose the names, it does not mean that all defaulters are wilfull defaulters. We see no reason that the names need to be kept secret,” observed the Chief Justice.

While referring to the information by RBI in sealed covers, the Chief Justice of India led bench observed that the list of 57 defaulters submitted by the RBI owe more than Rs 85,000 crore to the banking system.

The bench also expressed concerns over the lack of concrete action to tackle the menace of bad loans. The government, however, highlighted that a six-member committee headed by the executive director of the RBI has been set up to look into issues of defaults. The committee has met all stakeholders and six meetings have been held so far, stated Solicitor General Ranjit Kumar in court.

The committee will submit its report by October-end to the Ministry of Finance who will decide on the further course of action, added the affidavit.

The Supreme Court is hearing a petition filed by NGO Centre for Public Interest Litigation (CPIL) in 2003, which had originally raised the issue of loans given to some companies by state-owned Housing and Urban Development Corporation (HUDCO).

The PIL had claimed that over Rs 40,000 crore of corporate debt was written off in 2015. The apex court had taken note of a report on rising bad loans in a national daily (Indian Express) and questioned the RBI.

Advocate Prashant Bhushan argued on behalf of the petitioners that banks are still advancing loans to defaulters and questioned the credibility of the six member committee formed by the government.

"The committee cannot have people and banks who are at the heart of the problem. RBI has been restructuring loans for defaulters. The actual loans default amount is over Rs 10 lakh crore," claimed Bhushan.

The apex court will now hear the matter on October 28.

Bad loans in the banking sector have risen to over Rs 6 lakh crore after the RBI conducted an asset quality review of the sector last year. The review pushed banks to recognize visibly stressed assets as bad loans and provide for them.