The Reserve Bank of India has worked itself into a corner, by being averse to sharing information on top defaulters. Turning down an RTI query filed by BusinessLine , it argued that it did not have any such list and that “compilation of the same would disproportionately divert the resources of the public authority”. The RBI had also submitted a list of defaulters owing ₹500 crore or more to public sector banks only after the Supreme Court’s admonition. Even while doing so, the central bank has pleaded for confidentiality in the interest of business sentiment, perhaps implicitly fearing that public anger against businesses and bankers alike — fuelled by images and perceptions of certain defaulters leading lavish lifestyles — may spin out of control and lead to the cessation of all lending and industrial activity. Its fears are not unfounded. There is a case for making a distinction between wilful defaulters and the many others who, like their lenders in the banking sector, were stymied by the post-2008 slowdown. In urging the courts and the public to take a sober, balanced view, the RBI cannot be faulted.
Yet, if we are to go by Mahatma Gandhi’s dictum that “sunlight is the best disinfectant”, there is no reason why wilful defaulters’ names should be concealed from the public eye — more so when government-run banks account for over 80 per cent of the deposits. Indeed, there is a precedent here. In the mid-1990s, a list of major defaulters was made public on at least two occasions — and there was none of the upheaval that the RBI seems to fear. If the RBI feels that big ticket disclosures could lead to a run on the banks, this is not borne out by experience. The implosion of the Union Bank of India and the Indian Bank did not lead to panic. The RBI is being disingenuous when it argues that collating such data could lead to a diversion of resources, when the Credit Information Bureau (India) Limited routinely shares such information with telecom companies and financial entities on payment of a fee. As the apex court has observed, the RBI cannot readily claim that its fiduciary relationship with banks (its acting as a trustee and custodian of bankers’ interest) restrains it from sharing information on big defaulters. Except for atomic energy, space and defence, the case for other areas being kept out of the RTI Act is less than convincing.
The Centre and the RBI should be seen to be even-handed in dealing with small and big borrowers alike. Under the Sarfaesi Act, a small ticket defaulter is shamed by public notices being issued against him. A climate of sobriety and objectivity is called for, if business sentiment is to receive a boost. It’s time the Centre cleared the air.