Willful defaulters of banks

Kashmir Times. Dated: 11/12/2018 3:32:11 PM

The Reserve Bank of India should not shy away from sharing the details of the willful defaulters of the banks in the interest of public money

The Reserve Bank of India (RBI) has landed itself in the midst of another controversy after it refused to disclose the identities of those corporate houses which are willful defaulters on repayment of loans from the Public Sector Banks (PSBs). Despite the fact that it has been clearly stated that the information available with the RBI comes under the domain of the Right To Information (RTI) Act because of the fact that the central bank has been monitoring the working of the PSBs, which are the custodians of the public money, information on many issues has not been released. The RBI also did not disclose the identities of defaulters as well as the expenditure on printing of new currency notes after the two-year old demonetization was announced by the BJP-government. In both the cases, the citizens have challenged the order of the RBI. It was only last week the Chief Information Commissioner (CIC) has issued a show cause notice to the RBI Governor Urijit Patel to "show cause why maximum penalty should be not imposed on him for not disclosing the names of individuals and companies", which have been considered to be the willful defaulters of the PSBs in the country. Withholding of the information has been seen as the central bank's ostensible 'defiance' of Supreme Court orders on disclosing the names of willful defaulters on bank loans worth hundreds of crores of rupees. In an order on November 2, 2018, Information Commissioner M Sridhar Acharyulu has come down heavily on the RBI and its chief for failing to uphold the interest of the public at large and not fulfilling its statutory duty to the depositors, the economy and the banking sector, by privileging individual banks' interests over its obligation to ensure transparency. In sharp focus is the matter on the issue of burgeoning bad loans at the country's commercial banks, which by the RBI's own admission had, at the gross level, surged to 11.6 percent of all advances as on March 31, 2018, from September 2017's 10.2 percent level. While the RBI has repeatedly acknowledged the gravity of the problem it faces, including in ensuring more accountability from the more numerous PSBs over which it wants greater control, it has consistently invoked both the risk to the country's 'economic interest' and its 'fiduciary' relationship with lenders to avoid sharing information on the largest defaulters with RTI applicants. The CIC has also observed that shying away from sharing these details with the public also amounts to lack of transparency in its working.
The CIC has made it clear in its order that it is the responsibility of the RBI to monitor the functions of the PSBs and watch the interests of the common masses, who park their hard-earned money in their bank accounts for the safe keeping. Citing the SC's 2015 order, where the judges had directed the RBI to comply with the provisions of the RTI Act after observing that the "RBI has no legal duty to maximise the benefit of any public sector or private sector bank, and thus there is no relationship of 'trust' between them", the CIC has questioned, how the RBI cannot honour the SC directions. The Information Commissioner Acharyulu has rightly asked how the rule of law could be secured if a regulator like the RBI would not 'honour' a constitutional institution's directions. The CIC order is also unsparing of the BJP-government for not being more forthcoming. The CIC has justifiably asked the Finance Ministry why it should not explain to the people the action taken, or contemplated, to recover dues from willful defaulters, who owe banks more than Rs 50 crore, and, wherever warranted, the criminal proceedings initiated. It is no one's argument that all huge unpaid loans are by-products of malafide borrowing, but it is the responsibility of the RBI and the government to make as clean the process as it is legally possible, in order to retain public trust in the banking institutions. It is only now that the RBI has initiated steps to set up a digital Public Credit Registry that would include details of all borrowers including willful defaulters, it would be in public interest for the banking regulator to meet the CIC's November 16 deadline for furnishing the information sought about those owing Rs 1,000 crore or more, to start with. Apart from this, disclosure of the names of defaulters will also shed light on the information leaked selectively by the central government in respect of some defaulters while big corporate houses have been protected when their bad loans were written off through the budgetary support. In fact, the RBI will serve the interests of the people by putting all the information in the public domain.

 

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