The Supreme Court on Tuesday issued a notice to the Reserve Bank of India (RBI) to disclose names of loan defaulters who owe more than Rs 500 crore to 29 banks. The apex court took note of a Right to Information (RTI) response by the RBI showing that 29 public sector banks in the country have accumulated bad debts to the tune of Rs 1.14 lakh crore by writing them off as unrecoverable
The RTI reply was subsequently published by a national daily that came to the notice of the SC. The Bench, headed by Chief Justice TS Thakur decided to issue a notice to the RBI for its response dealing with a case relating to bad loans given by Housing and Urban Development Corporation (HUDCO) in 2003.
The petitioner, Centre for Public Interest litigation (CPIl), represented by advocate Prashant Bhushan, told the court that the Central Vigilance Commission (CVC) had indicted officers of HUDCO for illegally sanctioning loans to willful defaulters. They were ultimately let off by the Government which forced the petitioner to approach the apex court for an independent investigation.
Taking a cue from the case, the Bench referred to the RTI reply by the RBI recently published in a national daily showing that public sector banks had incurred a huge liability by issuing loans which they failed to recover. The same ended as non-productive assets (NPAs) of the bank.
The Bench, also comprising Justices R Banumathi and UU lalit, directed the RBI to produce within six weeks a list of all such borrowers who have defaulted on loans above Rs 500 crore. The Bench expressed surprise that no concrete steps were taken for the recovery of loan from these defaulters.
“You have a list of major defaulters who run empires and yet default,” the Bench said hoping for a response from the country’s apex banking regulator.
The apex court also asked the Government what action it proposed to take against big defaulters who are leading a “lavish lifestyle”. It sought to know how the State-owned banks and financial institutions were advancing large-scale loans without proper guidelines and whether there was adequate mechanism to recover them.
In response to an RTI application filed by a national daily, the RBI disclosed that 29 State-owned banks wrote off a total of Rs 1.14 lakh crore of bad debts between financial years 2013 and 2015, much more than they had done in the preceding nine years.