RBI provides ‘secret list’ of big loan defaulters to Supreme Court

Reserve Bank of India (RBI) has submitted a list of big loan defaulters as demanded by the Supreme Court, but with a request that the contents or the names of the list submitted in a sealed cover may not be disclosed as it would have an "adverse impact" for business and may "accentuate failure of business".

"Disclosing details of accounts where defaults have been found irrespective of the reasons for no-repayment may have adverse impact for business and in a way may accentuate the failure of business rather than nursing it back to health," RBI said in a recent affidavit submitted along with the list of defaulters.

"Disclosure of names of defaulters may have an impact on the livelihood of scores of employees employed in such entities," the RBI said.

A bench headed by Chief Justice T S Thakur had, last month, while expressing serious concern over rise in bad loans, directed the central bank to provide a list of companies that have defaulted on repayment of bank loans of over Rs500 crore.

The Supreme Court had also sought details of corporate debt restructuring schemes and a list of companies whose loans have been restructured within six weeks.

The apex court, had, on q February, asked how state-owned banks and financial institutions were advancing large-scale loans without proper guidelines and whether there was adequate mechanism to recover them.

The court had made RBI party to a PIL filed in 2005 by an NGO Centre for Public Interest Litigation (CPIL), in which it had raised the issue of loans advanced to some companies by state-owned Housing and Urban Development Corporation (HUDCO).

Advocate Prashant Bhushan, appearing for CPIL, had submitted that about Rs40,000 crore of corporate debt was written off in 2015.

Bhushan had also referred to a recent news report about writing off of a total of Rs 1.14 lakh crore as bad debt between 2013-2015 by the PSU banks.

The PIL, filed in 2005 through Bhushan, had also alleged that HUDCO had provided loans to "ineligible borrowers" and these have turned bad assets. 

RBI, in its affidavit, has pointed out various reasons such as delayed permissions from government and regulatory agencies, delayed acquisition of land, delayed sanction of loans, poor credit appraisal, poor monitoring, lack of business management knowledge, unanticipated business cycle downturn, commodity cycle downturn and poor project execution, etc as reasons for loan default.

The Supreme Court had also asked the government as to what actions it proposed to take against big defaulters who were leading a "lavish lifestyle".