Comments
Comparing the super-rich who default with impunity and the poor farmer, who is driven to suicide under the burden of his small loan, the Supreme Court on Tuesday asked the Reserve Bank of India to at least publicly expose the nature of the “very substantial amounts” that high net-worth defaulters owe banks.
The RBI, however, strongly resisted the apex court’s proposal. It argued that there are clients who are not wilful defaulters. And that any exposure would violate confidentiality and hurt business sentiments, impacting the economy.
The court, however, sought an explanation from the RBI on why it felt it was wrong to disclose the “huge” outstanding amounts as long as the names of these defaulters were kept a secret.
“Can the total amounts in default be disclosed? We can keep the names of the defaulters confidential, but total amounts can be disclosed...” said Chief Justice TS Thakur.
The Bench, also comprising Justice R Banumathi, is hearing a PIL filed by the NGO Centre for Public Interest Litigation (CPIL) seeking full disclosure of names and details of those who have defaulted after taking over ₹500 crore in loans.
The RBI had provided the court an exhaustive list of defaulters in a sealed cover. The comments came after the Bench went through the list of names. “People take thousands of crores to run their empires and then declare insolvency only to take more loans from other sources. This is when poor farmers are driven to suicide unable to pay their small debts,” Chief Justice Thakur observed.
The apex court proceeded to even question the RBI’s efficacy as a watchdog and regulator. “You (RBI) are the regulator. Loans are being given without security with the knowledge that they will not be paid back. Aren’t you supposed to be vigilant as the regulator? Are you not supposed to exercise supervisory control over the disbursal of loans?” said the Chief Justice.
The Court then decided to hold detailed hearings on whether confidentiality, as claimed by the RBI, would prevent the apex court from passing a judicial order to reveal the details of the “very substantial debt amounts”.
Issuing notice to the Indian Banks’ Association and the Ministry of Finance, the Bench asked the NGO CPIL to formulate the issues that need to be heard by the court. “We want you to formulate issues by April 26. We will have a focussed and articulate debate on these issues. Primary question is whether there is any confidentiality on information relating to outstanding debts over ₹500 crore,” said Chief Justice Thakur.
Next steps The apex court asked the RBI to prepare for questions regarding what its next steps would be in recovering the loans and also to provide information on the status of non-performing assets.
The RBI said any disclosure would violate the provisions of the RBI Act, Credit Information Companies ( Regulations) Act, 2005 and a 1983 law on fidelity and secrecy in public financial situations.
Representing CPIL, advocate Prashant Bhushan countered that there is no need for a cloak of secrecy, citing a 2015 judgment of the Supreme Court.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.