The Reserve Bank of India (RBI) may be in favour of keeping under the wrap the list of loan defaulters, but Supreme Court on Tuesday sought the Centre and Indian Banks’ Association (IBA)’s view on making the ‘tainted’ list public and steps to recover the money from them.
Noting that the outstanding amount of unpaid loans was substantial and mind-boggling, the apex court asked the RBI on how it failed to maintain “vigil” over huge amounts of loan cleared by private and Government banks to companies without ensuring repayment.
The observation by the court came after it went through a sealed cover report submitted by the RBI on the list of defaulters with loan of over Rs 500 crore against each of them. The court sought the list in a pending PIl proceeding where NGO — Centre for Public Interest litigation — alleged irregularities in lending of loans by Haryana Urban Development Corporation (HUDCO).
“If a bank is not managing its funds prudently, is the RBI not supposed to maintain any surveillance and vigil over themIJ…After all RBI is a regulator. In that capacity you are meant to be a watchdog,” said a Bench of Chief Justice TS Thakur and Justice R Banumathi.
While referring to huge default by the rich and mighty, the Bench commented on the loans given to poor farmers and its recovery. “People are taking thousands of crores of rupees as loan and setting up a corporate empire and later declaring their companies sick. On the other hand, some farmers who take small loans are made to suffer,” the Bench added.
For the RBI, senior advocate Jaideep Gupta informed the court that over a period of time RBI has decentralised its functions related to day-to-day functioning of banks and issues related to restructuring of loans.
On disclosure of defaulters, Gupta said the RBI is bound by confidentiality clause and disclosing names will affect economy and commercial interests of companies. However, advocate Prashant Bhushan, who appeared for petitioner NGO, said that this objection raised by the RBI was overruled by the apex court in a recent decision, which allowed such information to be disclosed under RTI.
looking at the substantial amount involved, the court wished to know the steps to recover the outstanding amount and sought response of both the Ministry of Finance and the IBA by April 26, the next date of hearing.