RBI Wants To Protect Identity of Major Defaulters

RBI has told the Supreme Court that it does not favour publishing names of defaulters who owe more than Rs 500 crore to banks.

If the common man defaults a bank loan instalment by a day, his or her name would be all over the place and notices would be coming in thick and fast. If farmers owe a few thousands, his house is attached and sold; but if a person owes Rs 500 crore or more to banks, his name is kept secret. By whom? The Reserve Bank of India (RBI).

The RBI has told the Supreme Court in no uncertain terms that it was not in favour of publishing the list of loan defaulters who owed public sector banks Rs 500 crore or more.

Reason? Such disclosure may hurt the business climate in the country and endanger the jobs of thousands working in these firms.

This means that some top industrial houses employing thousands of people may be the defaulters.

The RBI also feels that disclosing the identity of such defaulters might involve the statutory, contractual and fiduciary rights (of the defaulters).

Senior advocate Jaideep Gupta, appearing for the Reserve Bank, told the Supreme Court that the grant of loans was covered by various statutes. The main one is the RBI Act which has certain contractual obligations.

“It is extremely necessary to keep these names confidential due to their fiduciary relationship,” Gupta told the bench of Chief Justice J.S. Khehar and Justice D.Y. Chandrachud, which is hearing a plea from the NGO Centre for Public Interest Litigation.

The RBI was responding to a suggestion from the Supreme Court on making public the list of major defaulters who owe Rs 500 crore and above to banks. This is because these loans were disbursed with the taxpayer’s money.

The Reserve Bank has already furnished the list in a sealed cover to the court on condition that the names should not be made public.

Justice Khehar asked solicitor-general Ranjit Kumar to get the government viewpoint in the light of the central bank’s objections.

Kumar informed the court that the government had set up a five-member committee to look into the matter and was examining its report.

How long does it take for the government to study a report? There must be a timeframe. Disclosure of Vijay Mallya’s name or that of Subrata Roy has not hurt the business climate in India.