SC for making public the loan default amount, RBI opposes

New Delhi: The Supreme Court on Tuesday favoured making public the total amount of outstanding loans given by banks to various individuals and entities and running into lakhs of crores of rupees as per the information provided to it by RBI in a sealed cover.

"This information does make out a case. This is quite a substantial amount which is involved," a bench comprising Chief Justice T S Thakur and Justice R Banumathi said.

However, this was opposed by the Reserve Bank of India (RBI) which said there was a confidentiality clause and the figure will have its own impact if it is disclosed.

Noting that the issue was important, the bench said it will examine if the total amount of defaulting loans running into crores of rupees can be disclosed and asked the parties involved in the matter to frame various issues that could be debated.

The bench, which expanded the scope of the PIL, impleaded Ministry of Finance and Indian Bank's Association as parties posted the matter for further hearing on April 26.

The petition, which was filed in 2003 by NGO Centre for Public Interest Litigation (CPIL), had originally raised the issue of loans advanced to some companies by state-owned Housing and Urban Development Corporation (HUDCO). The plea had said that about Rs 40,000 crore of corporate debt was written off in 2015.

Earlier, the Supreme Court had directed the RBI to provide a list of companies which are defaulters of bank loans of over Rs 500 crore while expressing serious concern over the rise in bad loans.

The apex court had also asked the RBI to provide within six weeks the list of companies whose loans have been restructured under corporate debt restructuring schemes.

The bench had expressed surprise that no concrete steps were taken for the recovery of loan from the defaulters.

While passing the order, the court had taken note of a report in a national daily about bad loans or non-performing assets (NPA) and the inability of the banks to recover them.

The bench referred to the documents supplied by RBI in a

sealed cover and said "the figures have gone up" since June 2014 and "these figures are not confidential."

"The amount you have mentioned is outstanding. It is a large amount. If we go by your figure, the next question would be what are you doing for the recovery What steps would be taken for recovery," the bench said when a senior advocate, appearing for RBI, resisted the idea of making disclosure of the total outstanding amount on the ground that "disclosure of the figures will have the impact."

When the bench wanted to know whether RBI had "immunity" over disclosing this information, the counsel cited the provisions in the Reserve Bank of India Act and The Credit Information Companies (Regulation) Act, 2005, which mandates confidentiality of information.

Solicitor General Ranjit Kumar also mentioned the provisions in Public Finance and Audit Act, 1983 on the issue of confidentiality.

The idea of formulating the issues came from the RBI, which said it was important keeping in mind the decentralisation of banks which had taken place in the past.

It was suggested that in view of decentralisation of the banks, they can be represented by their association or a collective body like the All India Bank Association.

"Banks should be represented. The question of non- performing assets (NPA) is involved," the RBI said.

Taking note of the submission, the bench said "You (parties) formulate the points of questions. Also, include is there any confidentiality (issue) in disclosing the total outstanding amount."

Going by the amount involved in default, it appears that the banks concerned are not monitoring its funds periodically, the bench said, adding "it is giving loans without getting it returned."

"Are you (RBI) not supposed to keep a vigil and supervise how the loans have to be recovered. In how many cases you have taken action against those who have run away," the bench asked the RBI counsel, who said "action has been taken".

When the hearing was nearing an end, Bhushan referred to RBI Governor Raghuram Rajan saying "I thought that the present RBI Governor is a good man but I am surprised with the type of affidavit filed by the RBI."

He also criticised the RBI Governor for issuing the circular not to disclose the list of wilful defaulters.

The bench stopped him short and said "that does not make him a bad man."

The petition, which was filed in 2003 by the Centre for

Public Interest Litigation (CPIL), had originally raised the issue of loans advanced to some companies by state-owned Housing and Urban Development Corporation (HUDCO). The plea had said that about Rs 40,000 crore of corporate debt was written off in 2015.

Earlier, the Supreme Court had directed the RBI to provide a list of companies which are defaulters of bank loans of over Rs 500 crore while expressing serious concern over the rise in bad loans.

The apex court had also asked the RBI to provide within six weeks the list of companies whose loans have been restructured under corporate debt restructuring schemes.

The bench had expressed surprise that no concrete steps were taken for the recovery of loan from the defaulters.

While passing the order, the court had taken note of a report in a national daily about bad loans or non-performing assets and the inability of the banks to recover them.