Replying to an application filed by Pune-based RTI activist Vivek Velankar, the Bank makes the by-now predictable statement, "The information sought by you pertains to third party/ies and is personal information of third parties. Since no larger public interest is involved, the disclosure of information is exempted under section 8(1)(j) of the RTI Act."
There are two issues with this reply, says Mr Velankar. "First, the bank is using money deposited by the public to lend to borrowers and if the borrowers turn out to be wilful defaulters, we have every right to know their details. Secondly, it is mandatory for banks to submit the list of wilful defaulters who had defaulted on loans of Rs25 lakh and above, to the Reserve Bank of India (RBI) as per the regulatory norms."
"Under the circumstances, UBI cannot even use section 8(1)(j) to withhold information about wilful defaulters. In fact, they have no business to keep this information hidden from public or from its own customers. I have now no option but to file my first appeal," he added.
In several of its judgements, the central information commission (CIC) had ruled that section 8(1)(j) applies only to personal information and therefore can only be claimed by natural persons and not by corporate entities, such as a bank.
“Section 8(1)(j) cannot be applied when the information concerns institutions, organisations or corporates. Therefore, the Commission is of the opinion that Section 8(1)(j) cannot be relied on by these three third parties as they are not natural persons,” the CIC had said in a judgement
In another order, Prof Sridhar Acharyulu had stated, "The Commission finds no merit in hiding the names of, details and action taken against wilful defaulters of big bad loans worth hundreds of crores of rupees. The RBI shall disclose the bad debt details of defaulters worth more than Rs1,000 crore at the beginning, of Rs500 crore or less at a later stage within five days and collect such information from the banks in due course to update their voluntary disclosures from time to time as a practice under Section 4(1)(b) of the RTI Act."
Earlier in February 2016, even the Supreme Court had directed the RBI to furnish a list of the companies which are in default of loans in excess of Rs500 crore or whose loans have been restructured under the corporate debts restructuring (CDR) scheme by banks and financial institutions. (Read: Supreme Court asks RBI to submit list of big defaulters)
In July this year, demanding to stop the present practice of giving concessions to the defaulters and burdening the banking public with a lower rate of interest on their savings and increasing service charges, a leading bank union, namely the All India Bank Employees Association (AIBEA) has made public a list of top 2,426 wilful defaulters, who together owe over Rs1.47 lakh crore to banks.
As part of its nationwide campaign to celebrate the bank nationalisation day, the AIBEA had released a list of wilful defaulters of the public sector banks (PSBs). The Mehul Choksi-owned Gitanjali Gems Ltd, with its default of Rs4,644 crore to the Punjab National Bank (PNB) tops the list. It is followed by ABG Shipyard Ltd (Rs1,875 crore, owed to the State Bank of India-SBI), REI Agro Ltd (Rs1,745 crore, UCO Bank), Ruchi Soya Industries Ltd (Rs1,618 crore, SBI), Gili India Ltd (Rs1,447 core, PNB), Winsome Diamonds & Jewellery Ltd (Rs1,390 crore, Central Bank of India-CBI), Kudos Chemie Ltd (Rs1,301 crore, PNB), Nakshatra Brands Ltd (Rs1,109 crore, PNB), Coastal Projects Ltd (Rs984 crore, SBI) and Winsome Diamonds & Jewellery Ltd (Rs892 crore, PNB). These top 10 defaulters together owe Rs17,005 crore to state-run lenders. (Read: Top Wilful Defaulters: Here is the List of 2,426 Who Together Owe Rs1.47 Lakh Crore to Public Sector Banks
Interestingly, even a powerful union like AIBEA could not obtain any information on wilful defaulters from the Union Bank of India.
The same Bank refusing to divulge information under the RTI about wilful defaulters shows its brazen defiance of the law as well as utter contempt of the common people, who have placed their money, along with their trust, in the bank.
The term 'wilful default' has been defined in clause 2.1.3 of the RBI circular dated 1 July 2015. RBI states that a loan default will be 'wilful default' when:
a) The defaulting borrower has failed to pay but it has the ability to pay. In other words, there is a lack of intention to pay. A default occurs because of a lack of ability to pay, a lack of intention to pay or both.
b) The defaulting borrower has not utilised the funds for the purposes for which they were sought but has diverted the funds to other ends.
c) The defaulting borrower has siphoned off the funds out of the borrower company – i.e. funds are not available with the company in the form of other assets.
d) The defaulting borrower has disposed off or removed the collateral securing the loan without the knowledge of the bank or lender.
The term ‘siphoning of funds’, implies that borrowed funds are utilised for purposes unrelated to the operations of the borrower, to the detriment of the financial health of the entity or of the lender.
Mr Velankar, who is also president of Pune-based Sajag Nagrik Manch, says, "Despite having the capacity to repay loans, these wilful defaulters are not doing so. In most cases, even the bank knows that the borrower had siphoned off the money. In simpler words, this protection offered to wilful defaulters by the bank amounts to cheating a common bank customer like me.”
"All those concerned, including the RBI, and the finance ministry should direct all public sector banks to disclose suo motu all information about wilful defaulters under section 4 of the RTI Act. When all this information comes out in the public domain, there is some chance that some of the wilful defaulters would possibly return some of the public funds appropriated by them as bank loans," Mr Velankar added.
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