Thirteen years after the Supreme Court directed banks to deposit the excess interest charged from borrowers since 1991, the Reserve Bank of India (RBI) informed the court recently that a sum of over Rs 210 crore has been collected as part of this exercise. This amount has come as a windfall for the disabled as the apex court ruling of April 16, 2004 had set aside apart the amount to be spent on welfare of the disabled.
For now, the apex court has entrusted the amount with a Trust chaired by the Comptroller and Auditor General (CAG) that will comprise members from RBI, Indian Banks Association, Small Industries Development Bank of India (SIDBI) and Central Government.
The amount is expected to swell as out of the list of 100 scheduled commercial banks prepared by the RBI, some banks are yet to deposit the excess interest collected. The Trust will oversee the implementation of the court order and allocate the total money into the National Fund under Section 86 of the Rights of Persons with Disabilities Act.
As per the 2004 decision, all banks (commercial, cooperative and rural) had to contribute a sum of Rs 50 lakh to the fund and separately also deposit into it the excess interest charged from borrowers on loans taken after 1991. RBI filed an affidavit before the apex court information that in all, 100 commercial banks were asked to provide details of their deposit under the separate heads of Rs 50 lakh contribution and the excess interest received.
Of the 100, two banks (Siam Commercial Bank and Overseas Chinese Banking Corporation ltd) closed operations in 2003. Eight other banks stated they had not collected excess interest. Among the remaining 90 banks, 71 banks deposited the money under both heads. 14 banks deposited the contribution but not the excess interest collection. The total amount deposited by these banks in the Trust Fund was to the tune of Rs 210,21,15,152 (rupees two hundred and ten crore and twenty one lakh).
ING Vysya Bank contributed Rs 50 lakh to the trust fund but claimed it had no records available of excess interest as it entered the picture only in 2002 taking over operations in India from ING Bank NV. Four remaining banks out of the list of 90 failed to make any payment. These are Sikkim Bank (now merged with Union Bank of India), Sonali Bank ltd, Commerzbank AG, and Dresdner Bank AG.
The RBI further sought permission from Court to exempt Primary Co-operative Banks, Rural Co-operative Banks (District Central Co-operative Banks and State Co-operative Banks), and Regional Rural Banks from the ambit of Court order as these banks do not have sufficient means to provide the money. The bench accepted the suggestion and exempted all banks under these categories from the order passed in 2004. However, the amount collected from them will be utilized by the Trust. The cooperative banks had deposited a total of Rs 1.06 crore while rural banks collected a sum of Rs 52.21 lakh.