Following the footsteps of State Bank of India (SBI) and Bank of Maharashtra, another public sector lender, Indian Overseas Bank (IOB), has decided to keep hidden this year the names of big defaulters who have borrowed Rs100 crore and more, which were written off from its books. As reported by Moneylife, in November 2020, IOB had shared names of big defaulters
under the Right to Information (RTI) Act.
The application was filed by Pune-based RTI activist Vivek Velankar. In reply, R Mahalakshmi, assistant general manager and central public information officer (CPIO) of IOB says, "Information sought for contains information of customer (borrower loan details and recovery) of the Bank, which are available to public authority (i.e. Bank) under fiduciary relationship (i.e. bank and customer). The disclosures of this information to a third party is exempted under Section 8(1)(e) of the RTI Act."
"Moreover, information sought for is internal records of Bank. The disclosure of such information will adversely affect the commercial confidence of Bank. Hence information sought for is exempted under Section 8(1)(d) of the RTI Act," the CPIO of IOB says.
Further, she says, "...information sought for relates to write off done by Bank from (fiscal year-FY)2013-14 to (FY)2021-22 for nine years and culling out of information would disproportionately divert the resources of public authority and is denied under section 7(9) of the RTI Act."
Two years ago, IOB, however, had shared names of its big defaulters along with debts written off.
As on 31 March 2020, the Bank wrote off Rs17,821 crore and recovered just Rs102 crore or 0.5% from 66 big defaulters. These big defaulters, whose loans were written off, include Bhushan Steel & Power Ltd (Rs1,274.97 crore), ABG Shipyard Ltd (Rs693.62 crore), IL&FS Financial Services (Rs499.97 crore), Vadraj Cement Ltd (Rs521.8 crore), Lanco Infratech Ltd (Rs510.32 crore), IVRCL Ltd (Rs615.39 crore), Lanco Amarkantak Power Pvt Ltd (Rs875.94 crore) and Frost International Ltd (Rs841.03 crore).
Earlier, when Mr Velankar had asked IOB to reveal details of bad loans written off and the status of their recovery as well as the names of big defaulters with a loan amount of Rs100 crore and above, the Bank had refused to share this information under the RTI Act and had, instead, asked him to find it out for himself from the Bank's annual reports.
Many people, including Mr Velankar, who is also president of the Sajag Nagrik Manch, have filed numerous applications under the RTI Act with public sector banks (PSBs) to make the names of big defaulters public. But, so far, several banks have refused to share names of big defaulters citing 'confidentiality of customer data'. Maybe the confidentiality clause is applicable only for big defaulters and not small borrowers, whose details and photos keep appearing in newspapers along with recovery notices.
Coming back to the excuses given by the CPIO of IOB, Section 8 of the RTI Act contains exemptions from the disclosure of information. Here are the three Sections used by the CPIO to deny information on big defaulters to Mr Velankar...
(d) Information including commercial confidence, trade secrets or intellectual property, the disclosure of which would harm the competitive position of a third party, unless the competent authority is satisfied that larger public interest warrants the disclosure of such information;
(e) Information available to a person in his fiduciary relationship, unless the competent authority is satisfied that the larger public interest warrants the disclosure of such information;
In his 2011 judgement (Decision No. CIC/SG/A/2011/002069/16018), former central information commissioner Shailesh Gandhi had ruled, "... to claim the exemption under Section 8(1)(d) of the RTI Act, the PIO must establish that disclosure of the information sought (which may include commercial or trade secrets, intellectual property or similar information) would result in harming the competitive position of a third party."
Mr Gandhi, in his judgement, had said, "All relationships usually have an element of trust, but all of them cannot be classified as fiduciary. Information provided in discharge of a statutory requirement, or to obtain a job, or to get a licence, cannot be considered to have been given in a fiduciary relationship."
Even the Supreme Court, in its 2015 judgement, ruled that the RBI cannot withhold information citing 'fiduciary relations' under the RTI Act. "In the instant case, the RBI does not place itself in a fiduciary relationship with the financial institutions (though, in word it puts itself to be in that position) because the reports of the inspections, statements of the bank, information related to the business obtained by the RBI are not under the pretext of confidence or trust. In this case, neither the RBI nor the Banks act in the interest of each other. By attaching an additional 'fiduciary' label to the statutory duty, the Regulatory authorities have intentionally or unintentionally created an in terrorem
effect," the Bench had said. (Read: RBI cannot withhold information under RTI citing 'fiduciary relations': SC
The CPIO also used Section 7(9) of the RTI Act. It says, "An information shall ordinarily be provided in the form in which it is sought unless it would disproportionately divert the resources of the public authority or would be detrimental to the safety or preservation of the record in question."
Interestingly, in his reply, the CPIO of IOB states, "Information sought for is internal records of Bank." This means the information asked by Mr Velankar under the RTI Act is available on the records of the Bank. So, where is the question of diverting resources of IOB for culling out the information, which is already there, and the Bank had shared it just two years ago?
In this case, the CPIO of IOB has not offered to share the information in an alternate format with Mr Velankar.
An aggrieved Mr Velankar says, "When in November 2020, IOB shared names of big defaulters, which revealed that the Bank wrote off Rs17,821 crore and recovered just Rs102 crore or 0.5% from 66 big defaulters. So, what exactly happened this time? How can a public authority like Indian Overseas Bank keep changing norms for providing information under RTI Act?"
"Isn't this a mockery of the banking system? And these are the big borrowers who are not bothered to repay any money and banks like IOB wanted to protect their identity by not sharing names under RTI. Why are banks protecting such defaulters?" he asks.
Mr Velankar says, "It looks like PSBs are more interested in writing off loans of these big defaulters so as to show a smaller amount under non-performing assets (NPAs). Maybe there is a nexus between bankers and these defaulters resulting in banks not showing much interest in recovering written-off debt. Also, since these written-off loans are not part of the balance sheet, nobody even looks at them. This method of writing off loans is being rampantly used by banks and both, the finance ministry and the Reserve Bank of India (RBI), need to take strong action against banks indulged in such practices."