Governor says it is not okay to disclose all wilful default data
The Reserve Bank of India (RBI) governor, Dr Raghuram Rajan, seems to have taken a stand on not disclosing information on wilful defaulters, despite a Supreme Court ruling on the issue. So far as we know, RBI has not filed a review petition or obtained a stay on the December 2015 judgement delivered by a bench of Justices MY Eqbal and C Nagappan in a matter pertaining to 11 cases pertaining to denial of information by RBI and others under the Right to Information (RTI) Act.
However, on 5th April, during the interaction following the credit policy, Dr Rajan came out strongly against ‘indiscriminate naming of defaulters’. He is quoted as saying, “The act of default is sometimes not your fault—demand is weak, prices are low, dumping is going on, etc. So, there are a variety of reasons as to why a project gets stalled. Putting the promoter’s name up to say he defaulted, without giving the reason why, might not be right. We have no problem in publishing the wilful defaulter list—that is, where the promoter has, in the eyes of the bank, taken the bank for granted.”
A little before the credit policy, an activist who had filed an RTI application, seeking information on the inspection reports as well as show-cause notices issued to the top four banks in India, received the standard rejection from the banking regulator saying that disclosure of the information would not be in the economic interest of the State and, hence, exempted under Section 8 (1)a and d of the RTI Act. It will be interesting to see how the Supreme Court reacts to
Dr Rajan’s stand, if the petitioners take the issue to the court again.
However, the powerful All India Bank Employees Association (AIBEA) has come out strongly against the governor’s statement. On 6th April, CH Venkatachalam, AIBEA’s general secretary, wrote to Dr Rajan: “Mr Governor, we are of the strong view that in most of the cases involving the big-ticket defaulters, there is lethargy, leniency and accommodation but when it comes to the common man, our experience is different. At least what is sauce for the goose must be for the gander too.”
His letter said that AIBEA is aware that there could be some genuine reasons for loan defaults. However, when gross non-performing assets have risen alarmingly in the post-reform era from Rs39,250 crore in 1992-93 to Rs3,61,000 crore at the end of December 2015, “there seems to be some clear method in this madness of bulging bad loans.” Pointing out how industrialists remain rich and healthy even when their companies default, AIBEA asks Dr Rajan to make a beginning by publishing the names of 5,600 identified wilful defaulters who owe over Rs60,000 crore to banks. He also wants RBI to ask the government to ensure that such defaulters cannot hold public office.
AIBEA has also thrown its weight behind individual borrowers who are harassed by recovery agents for credit card defaults; he writes about a person in Tamil Nadu being beaten up by the police, at the behest of a private bank, for failing to pay a tractor loan. It is pertinent to note that RBI’s consumer charter announced over a year ago has not been implemented yet by prescribing penalties for failure to treat consumers fairly. The wilful defaulter issue seems set to go back to the Supreme Court again.